If a stock rose from $10 to $30 over ten years, the annual rate of return
A)was 20 percent
B)was greater than 20 percent
C)was less than 20 percent
D)cannot be determined

Question

Quizplus · Accepted Answer

The annual rate of return can be calculated using the formula for compound annual growth rate (CAGR): CAGR = (Ending Value/Beginning Value)^(1/Number of Years) - 1. Plugging in the values: CAGR = ($30/$10)^(1/10) - 1 = 0.116 or 11.6%, which is less than 20 percent.

If a Stock Rose from $10 to $30 Over Ten