What would be the annual compound return on a stock purchased at $20 per share, held for 5 years, and sold for $32.22?
Ignore brokerage commissions and tax implications and assume the stock paid no dividends during the holding period. Round to the nearest whole percent if necessary.
A) 3%
B) 10%
C) 15%
D) 16%
Answer: B
Explanation: B) $32.22/$20 = 1.611
Referring to the future value of $1 table, A-1, on the 5 period line 1.611 is the factor for a 10% return.
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