Use the Information for the Question(s)below

question 47

Multiple Choice

Use the information for the question(s) below.
Suppose you have $10,000 in cash and you decide to borrow another $10,000 at a 6% interest rate to invest in the stock market.You invest the entire $20,000 in an exchange traded fund (ETF) with a 12% expected return and a 20% volatility.
-Assume that the EFT you invested in returns -10%,then the realized return on your investment is closest to:

• A)-20%.
• B)-10%.
• C)-24%.
• D)-26%.

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Definitions:

Net Method

An accounting technique used to record purchases or sales of goods after deducting any discounts offered at the time of purchase or sale.

Discounts Lost

Charges incurred from not taking advantage of early payment discounts offered by suppliers.

Net Method

An accounting method for recording purchases where the purchase price includes a cash discount for early payment.

Periodic Inventory System

An accounting method where inventory is physically counted and valued at set intervals, affecting the cost of goods sold calculation.