XYZ stock price and dividend history are as follows: Dividend Paid at Year-End $5 Year 2018 2019 2020 2021 Beginning-of- Year Price $ 130 144 120 125 5 5 5 An investor buys six shares of XYZ at the beginning of 2018, buys another three shares at the beginning of 2019, sells one share at the beginning of 2020, and sells all eight remaining shares at the beginning of 2021.

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
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XYZ stock price and dividend history are as follows:
Dividend Paid at
Year-End
$5
Year
2018
2019
2020
2021
Beginning-of-
Year Price
$ 130
144
120
125
An investor buys six shares of XYZ at the beginning of 2018, buys another three shares at the beginning of 2019, sells one share at the
beginning of 2020, and sells all eight remaining shares at the beginning of 2021.
Required:
a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
Arithmetic time-weighted average returns
Geometric time-weighted average returns
5
5
5
Date
b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2018, to January 1, 2021.
(Negative amounts should be indicated by a minus sign.)
Cash Flow
%
%
Transcribed Image Text:XYZ stock price and dividend history are as follows: Dividend Paid at Year-End $5 Year 2018 2019 2020 2021 Beginning-of- Year Price $ 130 144 120 125 An investor buys six shares of XYZ at the beginning of 2018, buys another three shares at the beginning of 2019, sells one share at the beginning of 2020, and sells all eight remaining shares at the beginning of 2021. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Arithmetic time-weighted average returns Geometric time-weighted average returns 5 5 5 Date b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2018, to January 1, 2021. (Negative amounts should be indicated by a minus sign.) Cash Flow % %
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