If a stock increased from $25 to $50 in five years, the annual, compound rate of return was 20 percent.

Name: If a stock increased from $25 to $50 in five years, the annual, compound rate of return was 20 percent.
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Question

If a stock increased from $25 to $50 in five years, the annual, compound rate of return was 20 percent.​

Quizplus · Accepted Answer

This is false. The annual, compound rate of return would actually be approximately 9.4 percent, calculated as (1 + 0.094)^5 = 2, which is the factor by which the initial $25 investment grew to become $50.

If a Stock Increased from $25 to $50 in Five