alleryStart learning →A fund rises 50 percent in one year and then falls 50 percent. What is the net change over both years?
ANo net change at all
BA loss of 25 percent
CA loss of 50 percent
DA gain of 25 percent
Answer & Solution
Correct answer: B. A loss of 25 percent
Compounding gives 1.5 x 0.5 = 0.75, so the investor has lost 25% overall.
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