The Arithmetic Average Return on Your Portfolio for the Past

question 36

Multiple Choice

The arithmetic average return on your portfolio for the past 5 years is 9.3 percent.You earned −7.4 percent,17.1 percent,6.3 percent,and 11.8 percent for 4 of those 5 years.What rate of return did you earn in the fifth year?

• A)18.7%
• B)16.0%
• C)13.2%
• D)19.6%
• E)17.5%

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Definitions:

Net Worth

The total value of all assets owned by a person or entity minus any liabilities owed.

Assets

Resources owned by an individual or business that have economic value or are expected to provide future benefit.

Liabilities

Financial obligations or debts owed by a company or individual.

Benefits-Received Principle

The concept that individuals should be taxed in proportion to the benefits they receive from government services.