Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have invested in two mutual funds: $500 in Fund A 4 years ago, and $600 in Fund B 3 years ago. Today, these two

You have invested in two mutual funds: $500 in Fund A 4 years ago, and $600 in Fund B 3 years ago. Today, these two investments are both worth $800 (assuming no dividends or other distributions). Assume each fund continues to earn its respective rate of return, which is constant every year. Which one of the following statements is correct concerning these funds? (assuming annual compounding of interest rate).

A) Your investment in Fund B will be worth more than your investment in Fund A in three years.

B) One year ago, you have less money in Fund A than in Fund B

C) Fund B earns a higher annual rate of return than Fund A.

D) Fund B has earned an average annual return of 11.11%.

E) Fund A has earned an average annual return of 15%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance Theory And Practice

Authors: Anne Marie Ward

3rd Edition

1908199482, 978-1908199485

More Books

Students also viewed these Finance questions