Question

You invested $5,000 in the stock market one year ago. Today, the investment is valued at $5,500. What return did you earn? What return would you suffer next year for your investment to be valued at the original $5,000?A. 10%, -9.09%, respectivelyB. -10%, +9.09%, respectivelyC. 110%, -10%, respectivelyD. 110%, -9.09%, respectively

Answer 1

A

Step-by-step explanation:

Rate of return in one period = (value in year 1 / initial value) - 1

(5500 / 5000) - 1 = 0.1 = 10%

(5000 / 5500) - 1 = -9.09%