suppose that you have $14,000 in a rather risky investment recommended by your financial advisor. during the…

suppose that you have $14,000 in a rather risky investment recommended by your financial advisor. during the first year, your investment decreases by 40% of its original value. during the second year, your investment at the end of year one increases by 50%. your advisor tells you that there must have been a 10% overall increase of your original $14,000 investment. is your financial advisor using percentages properly? if not, what is your actual percent gain or loss of your original $14,000 investment?\n\nselect the correct choice below and fill in the answer boxes to complete your choice.\n(type a whole number.)\n\na. no, there is an actual percent gain of %\nb. yes, there is an actual percent loss of %\nc. yes, there is an actual percent gain of %\nd. no, there is an actual percent loss of %

suppose that you have $14,000 in a rather risky investment recommended by your financial advisor. during the first year, your investment decreases by 40% of its original value. during the second year, your investment at the end of year one increases by 50%. your advisor tells you that there must have been a 10% overall increase of your original $14,000 investment. is your financial advisor using percentages properly? if not, what is your actual percent gain or loss of your original $14,000 investment?\n\nselect the correct choice below and fill in the answer boxes to complete your choice.\n(type a whole number.)\n\na. no, there is an actual percent gain of %\nb. yes, there is an actual percent loss of %\nc. yes, there is an actual percent gain of %\nd. no, there is an actual percent loss of %

Answer

Explanation:

Step1: Calculate value after first - year

The investment decreases by 40% in the first year. The value of the investment after the first - year is $14000\times(1 - 0.4)=14000\times0.6 = 8400$.

Step2: Calculate value after second - year

The investment at the end of the first year increases by 50% in the second year. The value of the investment after the second year is $8400\times(1 + 0.5)=8400\times1.5=12600$.

Step3: Calculate the percent change

The percent change formula is $\frac{\text{Final value}-\text{Initial value}}{\text{Initial value}}\times100%$. Substitute the initial value of $14000$ and the final value of $12600$ into the formula: $\frac{12600 - 14000}{14000}\times100%=\frac{- 1400}{14000}\times100%=- 10%$.

Answer:

D. No, there is an actual percent loss of 10%