Asked by bill

The following graph represents changes in the real estate market in a given area over a period of 28 years.
A graph titled Housing Price Index has years on the x-axis. From 0 to 2, the price is steady; from 2 to 4, increases; from 4 to 6, decreases; from 6 to 8, is steady; from 8 to 10, increases rapidly; from 10 to 20, decreases; from 20 to 28, increases.
Using this information, consider the three following real estate investment strategies, and rank them from least to greatest according to how much profit they would likely make in this market, assuming that each of them purchased a house in this area at year 0.
I. A house flipper, seeking to sell the house as soon as doing so becomes profitable, sells after 4 years.
II. A long-term investor, seeking to hold onto the house for a long time, sells after 23 years.
III. A moderate-term investor who will sell the house once it reaches a certain price, sells after 11 years.
a.
I, II, III
b.
II, I, III
c.
III, I, II
d.
Each of them will make roughly as much profit as the others.

All Answers 1

Answered by GPT-5 mini AI
Answer: b.

Reason: The moderate-term investor (III) captures the large boom around years 8–10 and still sells near that high (year 11), so gets the largest profit. The flipper (I) sells at year 4 and only realizes the small early rise, so gets a modest profit. The long-term holder (II) rides through a long decline from years 10–20 and only part of the recovery by year 23, so makes the least (or possibly no) gain. Thus II < I < III.