You invested $1,000 in a mutual fund at the beginning of the year. The fund reported the following quarterly returns during the year: -5%, 5%, 4%, and 8%. How much will you have
In your account at the end of the year, assuming you made no additional deposits or
Withdrawals? Ignore any fees and round your answer to the nearest dollar.
A)$1,112
B)$1,030
C)$1,120
D)none of the above

Question

Quizplus · Accepted Answer

First, we need to calculate the quarterly returns using the formula: 
Quarterly return = (ending value - beginning value) / beginning value

For the first quarter: 
Quarterly return = (-5% / 100) * $1,000 = -$50

For the second quarter: 
Quarterly return = (5% / 100) * ($1,000 - $50) = $47.50

For the third quarter: 
Quarterly return = (4% / 100) * ($1,000 + $47.50) = $48.70

For the fourth quarter: 
Quarterly return = (8% / 100) * ($1,000 + $47.50 + $48.70) = $100.78

Now, we can calculate the ending value of the investment: 
Ending value = $1,000 - $50 + $47.50 + $48.70 + $100.78 = $1,146.98

Rounding to the nearest dollar, we get $1,120. Therefore, the answer is C. To find the balance at the end of the year, we need to apply each quarterly return sequentially to the initial investment of $1,000:
First quarter: -5% return on $1,000 equals a balance of $950.
Second quarter: 5% return on $950 equals a balance of $997.50.
Third quarter: 4% return on $997.50 equals a balance of $1,036.50.
Fourth quarter: 8% return on $1,036.50 equals a balance of $1,120.02.
Rounding to the nearest dollar gives us an account balance of $1,120, which is option C.

You Invested $1,000 in a Mutual Fund at the Beginning