A manager buys three shares of stock today, and then sells one of those shares each year for the next three years. His actions and the price history of the stock are summarized below. The stock pays no dividends. Time Price Action 0 $ 90 Buy 3 shares 1 100 Sell 1 share 2 100 Sell 1 share 3 100 Sell 1 share Calculate the time-weighted geometric average return on this portfolio. Calculate the time-weighted arithmetic average return on this portfolio. Calculate the dollar-weighted average return on this portfolio.
A manager buys three shares of stock today, and then sells one of those shares each year for the next three years. His actions and the price history of the stock are summarized below. The stock pays no dividends. Time Price Action 0 $ 90 Buy 3 shares 1 100 Sell 1 share 2 100 Sell 1 share 3 100 Sell 1 share Calculate the time-weighted geometric average return on this portfolio. Calculate the time-weighted arithmetic average return on this portfolio. Calculate the dollar-weighted average return on this portfolio.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A manager buys three shares of stock today, and then sells one of those shares each year for the next three years. His actions and the price history of the stock are summarized below. The stock pays no dividends.
|
Time |
Price |
Action |
|
0 |
$ 90 |
Buy 3 shares |
|
1 |
100 |
Sell 1 share |
|
2 |
100 |
Sell 1 share |
|
3 |
100 |
Sell 1 share |
- Calculate the time-weighted geometric average return on this portfolio.
- Calculate the time-weighted arithmetic average return on this portfolio.
- Calculate the dollar-weighted average return on this portfolio.
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