Although appealing to more refined tastes, art as a collectible has not always performed so profitably....

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Although appealing to more refined tastes, art as a collectible has not always performed so profitably....

Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, an auction house sold a sculpture at auction for a price of $10,211,500. Unfortunately for the previous owner, he had purchased it in 2000 at a price of $12,177,500.

What was his annual rate of return on this sculpture? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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Answer 1

Answer #1

r = (FV / PV)^{1 / t} – 1

r = ($10,211,500 / $12,177,500)^1/3 – 1

r = -5.70%

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Answer 2

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Although appealing to more refined tastes, art as a collectible has not always performed so profitably....

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