Question

For an investment of $26,245, a quarterly statement reports that the account balance is $26,292. The statement also reports that for the same quarter, the rate of return on the investment was -0.02%. Given the information regarding the investment's current balance, does the reported rate of return seem reasonable? Use complete sentences to explain your answer.

Answer 1

Rate of return is 0.2% positive according to given data. The given rate of return is inconsistent with the given data.

Explanation:

The rate of return on the statement is inconsistent with the information given.

As per given data

Investment = $26,245

Account balance = $26,292

Return on the investment

Difference = $26,292 - $26,245 = $47

Investment is increase by $47

Now calculate the percentage of rate of return.

Percentage change = ($47 / $26,245) x 100 = 0.2%

Rate of return is 0.2% positive according to given data. Hence proved that, the given rate of return is inconsistent.

Answer 2

The statement reports the investment's value has gone up. That is inconsistent with a negative rate of return, which would mean the value has gone down.

No, the reported rate of return does not seem reasonable.