Consider an Investment Held Over Three Years with a Return

question 21

Multiple Choice

Consider an investment held over three years with a return of +20 percent in the first year,−25 percent in the second year,and +20 percent in the third year.What is the arithmetic mean return on the investment?

• A)−2.6%
• B)+2.6%
• C)+5.0%
• D)+8.0%

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Definitions:

Cones

Photoreceptor cells in the retina of the eye that are responsible for color vision and function best in relatively bright light.

Human Retina

The light-sensitive layer of tissue at the back of the inner eye, which contains photoreceptor cells that convert light into neural signals.

Total Color Blindness

A rare condition where an individual cannot perceive any color at all, seeing only shades of gray.

Rubella Virus

A contagious virus causing rubella (German measles), characterized by a rash and fever, important for its danger to pregnant women due to potential birth defects.