You invested $5,000 in the stock market one year ago. Today, the investment is valued at $4,500. What return did you earn? What return would you need to get next year to break even overall?
A) −111.11 percent, +90 percent, respectively
B) −90 percent, +111.11 percent, respectively
C) −10 percent, +11.11 percent, respectively
D) −11.11 percent, +10 percent, respectively

Question

Quizplus · Accepted Answer

The return earned is calculated by the formula [(Current Value - Initial Value) / Initial Value] * 100. So, [(4500 - 5000) / 5000] * 100 = -10 percent. To break even, the investment needs to grow from $4,500 to $5,000, which is an increase of $500 on $4,500. The required return is calculated by (500 / 4500) * 100 = 11.11 percent.

You Invested $5,000 in the Stock Market One Year Ago