share of stock increased 2% in a week. If it could continue to grow at the...
share of stock increased 2% in a week. If it could continue to grow at the same rate for a year, what would the effective annual rate of return be? A. 52% B. 104% C. 180% D. 280% E. 300%
Please show math and formulas used. Thanks
Homework Answers
Effective annual rate of interest
=[ ( 1 + Rate of interest per year / Number of compounding)^ Number of compounding – 1] x 100
Now, Rate of interest per year / Number of compounding
= Rate of interest per year / Number of weeks
= Yearly rate / 52 weeks
= Weekly rate of interest
= 2%
Number of compounding = 52
So, Effective annual rate
= [ ( 1 + 2 / 100) ^ 52 – 1] x 100
= [ 2.800 – 1] x 100
= 1.800 x 100
= 180%
So, as per above calculations, option C is the correct option
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