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

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

Quizplus · Accepted Answer

The annual rate of return is calculated using the formula for compound annual growth rate (CAGR), which in this case does not equal 20 percent. The correct CAGR for a growth from $25 to $50 over five years is approximately 14.87%, not 20%.

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