Consider the Following Realized Annual Returns: the Average Annual

question 43

Multiple Choice

Consider the following realized annual returns: The average annual return on IBM from 1996 to 2005 is closest to ________.

• A) 18.48%
• B) 16.07%
• C) 19.28%
• D) 28.93%

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Definitions:

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Mortgage

A loan used to purchase property, where the property itself serves as collateral until the loan is paid off.

Book Value

The value of an asset as recorded on the balance sheet, calculated as the cost of an asset minus accumulated depreciation.

Fair Value

The estimated price at which an asset would change hands between a willing buyer and seller, not under compulsion and with reasonable knowledge of the relevant facts.