An Investor Starts with $1 Million and Converts It to 0.75

question 25

Multiple Choice

An investor starts with $1 million and converts it to 0.75 million pounds, which is then invested for one year. In a year the investor has 0.7795 million pounds, which she then converts to dollars at an exchange rate of 0.72 pounds per dollar. The U.S. dollar annual rate of return earned was _____.

• A) 4.97%
• B) 5.27%
• C) 6.45%
• D) 7.69%
• E) 8.26% [(0.7795 million pounds/0.72)/$1 million] - 1 = 8.26%

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Definitions:

Journal Entry

A record in accounting that notes the debit and credit effects of a financial transaction.

Truck Purchase

The acquisition of a truck, which is a capital investment and may be classified as a fixed asset on the balance sheet.

Office Supplies

Items and materials used in offices for daily work activities, including paper, pens, and office equipment.

Office Equipment

Fixed assets that are used in an office environment for the purpose of performing business operations, including computers, printers, and furniture.