You invested $1,400 in the stock market one year ago. Today the investment is valued at $1,100. What return did you earn? What return would you need to get back next year to break even overall?

Question

Quizplus · Accepted Answer

The return earned can be calculated using the formula:

Return = (Ending Value - Initial Value) / Initial Value * 100%

Return = (1100 - 1400) / 1400 * 100%
Return = -21.43%

To break even overall, the investment would need to have a return of 0%. Since the initial value was $1,400, the investment would need to be worth $1,400 next year.

Let X be the required return to break even next year. Then we can set up the following equation:

1400 * (1 + X/100) = 1100

Solving for X, we get:

X ≈ 27.27%

Therefore, the required return to break even next year is 27.27%.

Hence, the answer is C.

You Invested $1,400 in the Stock Market One Year Ago