If an Investor Buys a Stock and Holds It for Three

question 5

Multiple Choice

If an investor buys a stock and holds it for three years, earning 15% for the first year; negative 15% for the second; and 12% for the third, what was the annual geometric return?

• A) 3.1%
• B) 3.75%
• C) 4.11%
• D) 5.66%

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Definitions:

High Opportunity Cost

The significant loss of potential gain from other alternatives when one option is chosen.

International Trade

The transfer of commodities, services, and finance across the borders or territories of various nations.

Volume Of Trade

The total quantity of shares or contracts traded for a particular financial instrument or market during a given period.

Transportation Costs

Expenses associated with the movement of goods or services from one location to another, affecting supply chain and final pricing.