Score: 0 of 1 pt 5 of 20 (4 complete) ? HW Score: 23.08%, 6 of 4.C.10 Question H

Question

Score: 0 of 1 pt 5 of 20 (4 complete) ? HW Score: 23.08%, 6 of 4.C.10 Question Help Decide whether the following statement makes sense (or is clearly true) or does not make sense (or is clearly false). Explain My financial advisor showed me that l could reach my retirement goal with deposits of $249 per month and an average return of 5%. But I don't want to deposit that me of my paycheck, so I'm going to reach the same goal by getting an average annual return of 11% instead Choose the correct answer below O A. This does not make sense because $249 is not a lot of money to earn interest off of O B. This does not make sense because you cannot choose your own annual rate of return ° C. This makes sense because 11% of S249 is greater than 5% of S249 D. This makes sense because an average annual return of 11% is greater than 5%

Explanation / Answer

According to historical records, the average annual return since its inception in 1928 through 2014 is approximately 10%. Getting a higher average annual return is close to impossible without an active (and risky) management of the funds. This doesn’t make sense because you cannot choose your own annual rate of return.

Option B is the answer.

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