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On the distant planet of Zurg, the stock market had a return last year of -60% (negative 60%). This year, due to an economic recovery,
On the distant planet of Zurg, the stock market had a return last year of -60% (negative 60%). This year, due to an economic recovery, the stock market had a return of +100%. What was an investors effective (economic) annual return over this two year period? Assume that no dividends were paid and that an investor bought the investment at the beginning of this two-year holding period and sold it at the end of the two-year holding period. If the investor requires an annual return of 10% to be happy, is the investor happy?
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