Suppose That, One Year Ago, You Invested $20,000 in Mutual

question 92

Essay

Suppose that, one year ago, you invested $20,000 in mutual fund A and $10,000 in mutual fund
B. Which fund had the higher rate of return in the past year if the weighted average of the two rates of return exceeds the simple average? Present your reasoning.

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Definitions:

Net Operating Working Capital

The difference between a company's current assets and its current liabilities, excluding interest-bearing debt.

Working Capital Policy

It refers to the strategy a company employs to manage its current assets and liabilities to ensure it has enough liquidity to run its operations efficiently.

Accounts Payable

Short-term financial obligations that a company owes to its suppliers or vendors for goods and services received.

Trade Credit Discounts

Reductions in price offered by suppliers to buyers as an incentive for early payment within a specified period.