You have the following share price of XYZ. DATE Price 2-Mar-2021 $100 3-Mar-2021 $60 4-Mar-2021 $40 5-Mar-2021 $100 Investor B bought 100 shares of XYZ on 2-Mar-2021 and sold all the shares on 5-Mar-2021. Which answer is the closest value to the arithmetic average rate of return for the investor? A. 20% B. 15% C. 25% D. 0%

You have the following share price of XYZ. DATE Price 2-Mar-2021 $100 3-Mar-2021 $60 4-Mar-2021 $40 5-Mar-2021 $100 Investor B bought 100 shares of XYZ on 2-Mar-2021 and sold all the shares on 5-Mar-2021. Which answer is the closest value to the arithmetic average rate of return for the investor? A. 20% B. 15% C. 25% D. 0%

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 4EP

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You have the following share price of XYZ. DATE Price 2-Mar-2021 $100 3-Mar-2021 $60 4-Mar-2021 $40 5-Mar-2021 $100 Investor A bought 100 shares of XYZ on 2-Mar-2021 and sold all the shares on 5-Mar-2021. Which answer is the closest value to the geometric average rate of return for the investor? A. 15% B. 20% C. 25% D. 0%
You have the following share price of XYZ. DATE Price 2-Mar-2021 $100 3-Mar-2021 $60 4-Mar-2021 $40 5-Mar-2021 $100 Investor C bought 100 shares of XYZ on 2-Mar-2021, bought another 100 shares on 4-Mar-2021 and sold all the shares on 5-Mar-2021. Which answer is the closest value to the dollar-weighted average rate of return for the investor? A. 20% B. 0% C. 15% D. 25%
An investor buys one share of a stock at $85 at t= 0. He buys an additional share for $90 at t= 1. The stock pays a dividend of $5 per share at t = 1 and t = 2. The investor sells both the shares at t = 2 for $100 each. Which of the following is most likely the time weighted rate of return? A. 11.34%. B. 14.18%. C. 14.94%.
XYZ's stock price and dividend history are as follows: Year 2018 2019 2020 2021 Beginning-of-Year Price $ 132 158 119 132 Dividend Paid at An investor buys three shares of XYZ at the beginning of 2018, buys another two shares at the beginning of 2019, sells one share at the beginning of 2020, and sells all four remaining shares at the beginning of 2021. Arithmetic average rate of return Geometric average rate of return Year-End $ 4 4 4 4 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.) Dollar-weighted rate of return % 0.13 % 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, 2018, to January 1, 2021. If your calculator cannot calculate internal rate of return, you will have to use trial and error.) (Round your…
Assume you purchase a share of stock for $50 at time t=0, and another share at $65 at time t= 1, and at the end of year 1 and year 2, the stock paid a $2.00 dividend. Also, at the end of year 2 you sold both shares for $70 each. What is the time-weighted rate of return? Give typing answer with explanation and conclusion
Suppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share) and sell the shares for $36.45 each. The dollar- weighted return on your investment is Answers: А. -1.75%. B. 8.00%. C. 4.08%. D. 8.53%. Е. 12.35%.
a. All future prices and future dividends are expected values OTrue OFalse b. Shareholders elect: Cofficers OManagers ODirectors Oinvestors c. If Do= $2and dividends are expected to grow at a rate g = 5% then D7 !! O$2.68 OS2.1 O$1.39 O$2.81 d. The market price of a share is always equal to the estimated price of a share. OTrue OFalse e. A share with voting rights is more valuable than a share without voting rights OTrue OFalse Give your reasons
XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2019 2020 2021 2022 $ 140 150 130 140 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. Arithmetic average rate of return Geometric average rate of return 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.) $7 5.52 % 5.02 % Dollar-weighted rate of return 7 7 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…
A. If a security offers a dividend amounting to P 5.23/ share and an investor purchased 200 shares at P 77.50/share, what is his Total Investment Return at the end of the year if the share price increased by 8%? Based on the given above, compute for the Dividend Yield Rate, Capital Gains Rate, and Total Investment Return Rate. Dividend Yield Rate: Dt+1/Pt = (P5.23+1/77.50) = 0.06748 or 6.748% Capital Gains Rate: (Pt+1-Pt) /Pt = 77.50 x 8%= 6.2 = 77.50/6.2= 83.7 = 83.7-77.50 = 6.2/77.50 = 0.08 or 8% Total Investment Return Rate: (Dt+1+Pt+1-Pt) /Pt = (5.23+1+83.7-77.50)/ 77.50 = 0.147 or 14.7%
What rate of return should you expect to earn on an investment in the stock described below if you bought it at its current market price? Stock A Earnings: $3.00 per share Dividend: $1.50 per share Expected growth rate: 5% Current market price: $60 per share 5.0% O 10.0% O 2.5% O7.5% Ruestion 11 How did you solve the problem above? Show your work. P Type here to search mi 75
a. All future prices and future dividends are expected values OFalse OTrue b. Shareholders elect: COfficers OManagers ODirectors Oinvestors !! c. If Do= $2and dividends are expected to grow at a rate g = 5% then D7 O$2.68 O$2.1 O$1.39 O$2.81 d. The market price of a share is always equal to the estimated price of a share. OTrue OFalse e. A share with voting rights is more valuable than a share without voting rights. OTrue OFalse Give your reasons
Suppose you purchase one share of the stock of Red Devil Corporation at the beginning of year 1 for $43.00 At the end of year 1, you receive a dividend of $2, and buy one more share for $47.00. At the end of year 2, you receive total dividends of $4 (e., $2 for each share), and sell the shares for $55.00 each. What is the time-weighted return on your investment? (Round your answer to 2 decimal places. Do not round intermediate calculations.) Return 1%