Question

If you had $1,000 to invest into the following funds, which one would have the highest value (not including any fees) at the end of the second year?


The Brown, Purple and Yellow funds all performed the same, so it is a three-way tie for highest value at the end of 2 years.

Purple Fund with Year 1 return of +10% and Year 2 return of -10%

Brown Fund with Year 1 return of 0% & Year 2 return of 0%

Yellow Fund with Year 1 return of +30% and a year 2 return of -30%

Answer 1

.............................................................Budget Challenge?

Answer 2

ANSWER: Brown Fund with Year 1 return of 0% & Year 2 return of 0%.

EXPLANATION: The three funds performed the same in this particular case. The Purple Fund had a return of +10% in the 1st Year and -10% in the 2nd Year. The invested amount stands at $1100 at the end of the 1st year. At the end of 2nd year, it returned a negative 10% incurring a loss. The invested fund goes down by 10% of $1100 and stands at $990

The Brown Fund showed a return of 0% for both the years which indicates that the fund $1000 stood same even at the end of the 2nd year.

The Yellow Fund gave a handsome return of 30% of the invested fund of $1000 making it $1300 by the end of the 1st year. Whereas, by the end of the 2nd year, it went down by 30% of the amount and dipped down to $910.