At the beginning of the year, John invested $10,000. Twelve months later, John sold his investment for $11,000. Assuming he received no dividends or interest during this time, what is his rate of return?

Question

Quizplus · Accepted Answer

The rate of return is calculated by dividing the amount of profit or loss by the initial investment and expressing it as a percentage. In this case, John made a profit of $1,000 ($11,000 - $10,000) on an initial investment of $10,000.

Rate of return = (Profit/Initial investment) x 100%
= ($1,000/$10,000) x 100%
= 10%

Therefore, John's rate of return is 10%.

At the Beginning of the Year, John Invested $10,000