Your $1000 investment in an energy stock doubles. Your $1000 investment in a tech stock drops in half. What was the total return on the two investments?

Total return, when measuring performance, is the actual rate of return of aninvestment or a pool of investments over a given evaluation period. Total returnincludes interest, capital gains, dividends and distributions realized over a given period of time.

So the total return = (1000*2) + (1000/2) = $2500

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Edufirst Edufirst · Answer 2 · 2018-08-11T22:22:27+02:00

Answer: 0.25 or 25%

Explanation:

1) The first stock will double its value ⇒ new value = $1,000 × 2 = $2000

2) The second stock wil dropt to half ⇒ new value = $ 1,000 / 2 = $500

3) Total value of the investments after the change of the values: $2,500 + $ 500 = $ 2,500.

4) Return on investment = benefit / investment

5) benefit = new value - investment = $2,500 - $2000 = $ 500

6) Return on investment = $500 / $2,000 = 0.25

Which you can also represent in percent form: 0.25 = 25%.