The One-Year Holding Period Returns for Cherokee Adventures for 2010

question 37

Multiple Choice

The one-year holding period returns for Cherokee Adventures for 2010 and 2011 are given below.If Cherokee's geometric average return for 2010 through 2012 was 15 percent, what was its implied one-year holding period return for 2012?

• A) 12.8%
• B) 11.8%
• C) 24.6%
• D) 16.0%
• E) Not enough information is given to answer this question.

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Definitions:

Arbitrage

The simultaneous purchase and sale of the same asset in different markets to profit from unequal prices.

Profit

Profit represents the financial gain achieved when the revenues generated from business activities exceed the expenses, taxes, and costs incurred in operating the business.

Market

A medium or place where buyers and sellers conduct transactions, either physically or virtually, involving goods, services, or securities.

Financial Leverage

The application of borrowed capital to escalate the possible earnings from an investment.