XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2019 $ 185 2020 195 2021 170 2022 185 $6 6 An investor buys three shares of XYZ at the beginning of 2019, buys another two shares at the beginning of 2020, sells or share at the beginning of 2021, and sells all four remaining shares at the beginning of 2022. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-yea rates of return and final answers to 2 decimal places. Do not round other calculations.) Answer is complete and correct
XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2019 $ 185 2020 195 2021 170 2022 185 $6 6 An investor buys three shares of XYZ at the beginning of 2019, buys another two shares at the beginning of 2020, sells or share at the beginning of 2021, and sells all four remaining shares at the beginning of 2022. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-yea rates of return and final answers to 2 decimal places. Do not round other calculations.) Answer is complete and correct
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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son.1
Transcribed Image Text:XYZ's stock price and dividend history are as follows:
Year Beginning-of-Year Price Dividend Paid at Year-End
2019
$ 185
195
170
185
2020
2021
2022
An investor buys three shares of XYZ at the beginning of 2019, buys another two shares at the beginning of 2020, sells one
share at the beginning of 2021, and sells all four remaining shares at the beginning of 2022.
Answer is complete and correct.
Required:
a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year
rates of return and final answers to 2 decimal places. Do not round other calculations.)
Arithmetic average rate of return
Geometric average rate of return
$6
3.75
3.28
6
6
6
%
%
Transcribed Image Text:b. What is the dollar-weighted rate of return? (Hint Carefully prepare a chart of cash flows for the four dates corresponding
to the turns of the year for January 1, 2019, to January 1, 2022. If your calculator cannot calculate IRR, you will have to use
trial and error or a spreadsheet program.) (Round your answer to 4 decimal places. Negative amount should be indicated
by a minus sign.)
Answer is complete but not entirely correct.
Dollar-weighted rate of return
1.6498
%
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