Question

5. Suppose you had $10,000 to invest three years ago, in February of 2017. Research three stock indices, DJIA, Nasdaq Composite and S&P 500. How much money would have now if you invested $10,000 in these stock indices? Which one provided a greater return?

Answer 1

Solution:-

Let's calculate the required figures assuming that $10,000 was invested on the beginning of 27th Feb 2017 and returns are calculated till the end of 26th Feb 2020, i.e. 3 years

Particulars	DJIA	NASDAQ Composite	S&P 500
Opening price as on 27th Feb 2017 (1)	20,808.71	5,835.04	2,368.5
Closing price as on 26th Feb 2020 (2)	26,957.59	8,980.77	3,111.2
Total return during 3 years [{(2)-(1)}/(1)]	29.55%	53.91%	31.40%
Closing value of $10,000 investment [10,000+total return]	$12,955	$15,391	$13,140

As we can see from the above table, if $10,000 each were invested in the three indices, NASDAQ composite would offer the highest total return during 3 years of 53.91%, resulting in value of investment of $15,391.