Consider the following two investment situations:1. In 1980, when W.M. Company went public, 100 shares cost $1,650. Thatinvestment was worth $12,283,904 after 32 years (2012) with a rate of returnof around 32%. 2. In 1990, if you bought 100 shares of First Mutual Funds it would have cost$5,245. That investment would have been worth $289,556 after 22 years. Which of the following statements is correct?(a) If you had bought only 50 shares of the W.M. Company stock in 1980 and kept them for 32 years, your rate of return would be 0.5 times 32%.(b) If you had bought 100 shares of First Mutual Funds in 1990, you would have made a profit at an annual rate of 30% on the funds remaining invested.(c) If you had bought 100 shares of W.M. Company in 1980 but sold them after IO years (assume that the W.M. Company stock value increased at an annual rate of 32% for the first 10 years) and immediately put all the proceeds into First Mutual Funds, then after 22 years the total worth of your investment would be around $1,462,885.(d) None of the above.
Consider the following two investment situations:
1. In 1980, when W.M. Company went public, 100 shares cost $1,650. That
investment was worth $12,283,904 after 32 years (2012) with a
of around 32%.
2. In 1990, if you bought 100 shares of First Mutual Funds it would have cost
$5,245. That investment would have been worth $289,556 after 22 years.
Which of the following statements is correct?
(a) If you had bought only 50 shares of the W.M. Company stock in 1980 and kept them for 32 years, your rate of return would be 0.5 times 32%.
(b) If you had bought 100 shares of First Mutual Funds in 1990, you would have made a profit at an annual rate of 30% on the funds remaining invested.
(c) If you had bought 100 shares of W.M. Company in 1980 but sold them after IO years (assume that the W.M. Company stock value increased at an annual rate of 32% for the first 10 years) and immediately put all the proceeds into First Mutual Funds, then after 22 years the total worth of your investment would be around $1,462,885.
(d) None of the above.
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