Bill Has Been Adding Funds to His Investment Account Each

question 32

Multiple Choice

Bill has been adding funds to his investment account each year for the past 3 years.He started with an initial investment of $1,000.After earning a 10% return the first year,he added $3,000 to his portfolio.In this year his investments lost 5%.Undeterred,Bill added $2,000 the next year and earned a 2% return.Last year,discouraged by the recent results,he only added $500 to his portfolio,but in this final year his investments earned 8%.What was Bill's dollar-weighted average return for his investments?

• A)1.5 percent
• B)2.0 percent
• C)2.5 percent
• D)3.0 percent
• E)3.5 percent

---

Definitions:

Net Operating Income

The net amount a business earns after subtracting operating costs, excluding taxes and interest expenses.

Margin

A financial metric reflecting the difference between a product's selling price and the cost to produce it, commonly expressed as a percentage of the selling price.

Investment Opportunity

A financial or business venture or asset that has the potential to yield returns or profits.

Turnover

The rate at which inventory is sold and replaced over a given period or the rate at which employees leave and are replaced in a company.