An Investment Earns 10% the First Year,15% the Second Year

question 50

Multiple Choice

An investment earns 10% the first year,15% the second year and loses 12% the third year.Your total compound return over the three years was ______.

• A) 41.68%
• B) 11.32%
• C) 3.64%
• D) 13.00%

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Definitions:

Maximum Profit

The highest possible financial gain achievable from an investment or business operation, often estimated under ideal conditions.

Stock-Index Option Markets

Marketplaces where options based on the movements of stock market indices are traded, allowing investors to speculate or hedge against market swings.

Uncovered Call Option

An option contract that is sold without holding an offsetting position in the underlier, thus exposing the seller to unlimited risk.

Uncovered Put Option

A type of options strategy where the seller of the put option does not have a sufficient position in the underlying asset, exposing them to potentially unlimited losses.