Question

For an investment of $26,245, a quarterly statement reports that the account balance is $26,292. The statement also reports that for the same quarter, the rate of return on the investment was - 0.02%. Given the information regarding the investment's quarterly activity, is the reported rate of return reasonable? Use complete sentences to explain your answer.

Answer 1

The rate of return is not reasonable. This is because the investment is $26,245 and the quarterly statement reports that the account balance is $26,292. It is clear that there is an increase in the investment. And the actual rate of return (($26,292-$26,244)/ $26,292)*100) is 0.18%.