Ricardo invested $15,000 in a real estate fund. In the first year, the fund earned 8% In the second year, it lost 4% In the third year, the fund recovered and earned 6% Was Ricardo's return variable or not, and why?
Answer
A
Variable, because the returns were fixed each year.
B
Variable, because the returns depended on the real estate market performance.
C
Not variable, because the principal was returned.
D
Not variable, because the returns were steady.
Explanation
Ricardo’s returns changed from year to year: the fund gained 8%, lost 4%, and then gained 6%. That means his return was variable, reflecting changes in the real estate market. Choice A, “Variable, because the returns depended on the real estate market performance,” is correct.
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