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tment in stock ABC from 26/4/2017 to 31/12/2020? Give your answer as a discrete annual rate. b) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends? Give your answer as an annual continuously compounding rate. c) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends and you liquidate half of your shareholding on 31/12/2019 at a stock pri

tment in stock ABC from 26/4/2017 to 31/12/2020? Give your answer as a discrete annual rate. b) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends? Give your answer as an annual continuously compounding rate. c) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends and you liquidate half of your shareholding on 31/12/2019 at a stock pri

Essentials Of Investments
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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Use the price and dividend information in the following table for stock ABC to answer the following questions. a) Assuming dividends are fully reinvested (at the ex-div stock price), what is the geometric average annual return for an investment in stock ABC from 26/4/2017 to 31/12/2020? Give your answer as a discrete annual rate. b) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends? Give your answer as an annual continuously compounding rate. c) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends and you liquidate half of your shareholding on 31/12/2019 at a stock price of $34.22? Give your answer as an annual continuously compounding rate.

 

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cash dividend date 26/04/2017 23/06/2017 $ 0.37 19/09/2017 $ 0.25 11/01/2018 15/06/2018 $ 0.39 18/09/2018 $ 0.25 17/01/2019 18/06/2019 $ 0.39 20/09/2019 $ 0.27 7/01/2020 15/06/2020 $ 0.40 11/09/2020 $ 0.30 31/12/2020 stock dividend 5% 10% 7% ex-div stock price $ 30.11 $ 32.68 $ 31.44 $ 32.03 $ 31.10 $32.81 $ 30.93 $33.58 $ 33.05 $ 35.52 $36.74 $ 33.64 $ 33.59
Transcribed Image Text:cash dividend date 26/04/2017 23/06/2017 $ 0.37 19/09/2017 $ 0.25 11/01/2018 15/06/2018 $ 0.39 18/09/2018 $ 0.25 17/01/2019 18/06/2019 $ 0.39 20/09/2019 $ 0.27 7/01/2020 15/06/2020 $ 0.40 11/09/2020 $ 0.30 31/12/2020 stock dividend 5% 10% 7% ex-div stock price $ 30.11 $ 32.68 $ 31.44 $ 32.03 $ 31.10 $32.81 $ 30.93 $33.58 $ 33.05 $ 35.52 $36.74 $ 33.64 $ 33.59
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