QUESTION 13 Suppose an initial investment of $1000 returns $500 at the end of first year, $300 at the end of second year, $100 at the end of third year and $99 at the end of fourth year. Then the rate of return on this investment is negative. O True False
QUESTION 13 Suppose an initial investment of $1000 returns $500 at the end of first year, $300 at the end of second year, $100 at the end of third year and $99 at the end of fourth year. Then the rate of return on this investment is negative. O True False
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:QUESTION 13
Suppose an initial investment of $1000 returns $500 at the end of first year, $300 at the end
of second year, $100 at the end of third year and $99 at the end of fourth year. Then the rate
of return on this investment is negative.
True
O False
Expert Solution
Step 1
The rate of return is negative when the business suffers a loss on its investment amount within a specific period of time.
In the given statement:
Initial investment = $1000
Return:
Year 1: $500
Year 2: $300
Year 3:$100
Year 4: $99
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