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%.
