XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price $ 114 Dividend Paid at Year-End $ 5 7707 120 2824 100 105 An Investor buys four shares of XYZ at the beginning of 2021, buys another two shares at the beginning of 2022, sells one share at the beginning of 2023, and sells all five remaining shares at the beginning of 2024. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the Investor? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Arithmetic time-weighted average returns Geometric time-weighted average returns 96 b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2021. to January 1, 2024. Note: Negative amounts should be indicated by a minus sign. Date Cash Flow 01/01/2021 01/01/2022 01/01/2023 01/01/2024 b-2. What is the dollar-weighted rate of return? (Hint If your calculator cannot calculate Internal rate of return, you will have to use a spreadsheet or trial and error.) Note: Do not round intermediate calculations. Negative value should be Indicated by a minus sign. Round your answer to 4 decimal places. Rate of return

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:
Year
Beginning-of-Year
Price
$ 114
Dividend Paid at
Year-End
$ 5
7707
120
2824
100
105
An Investor buys four shares of XYZ at the beginning of 2021, buys another two shares at the beginning of 2022, sells one share at the
beginning of 2023, and sells all five remaining shares at the beginning of 2024.
Required:
a. What are the arithmetic and geometric average time-weighted rates of return for the Investor?
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Arithmetic time-weighted average returns
Geometric time-weighted average returns
96
b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2021. to January 1, 2024.
Note: Negative amounts should be indicated by a minus sign.
Date
Cash Flow
01/01/2021
01/01/2022
01/01/2023
01/01/2024
b-2. What is the dollar-weighted rate of return? (Hint If your calculator cannot calculate Internal rate of return, you will have to use a
spreadsheet or trial and error.)
Note: Do not round intermediate calculations. Negative value should be Indicated by a minus sign. Round your answer to 4
decimal places.
Rate of return
Transcribed Image Text:XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price $ 114 Dividend Paid at Year-End $ 5 7707 120 2824 100 105 An Investor buys four shares of XYZ at the beginning of 2021, buys another two shares at the beginning of 2022, sells one share at the beginning of 2023, and sells all five remaining shares at the beginning of 2024. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the Investor? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Arithmetic time-weighted average returns Geometric time-weighted average returns 96 b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2021. to January 1, 2024. Note: Negative amounts should be indicated by a minus sign. Date Cash Flow 01/01/2021 01/01/2022 01/01/2023 01/01/2024 b-2. What is the dollar-weighted rate of return? (Hint If your calculator cannot calculate Internal rate of return, you will have to use a spreadsheet or trial and error.) Note: Do not round intermediate calculations. Negative value should be Indicated by a minus sign. Round your answer to 4 decimal places. Rate of return
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