Mario Luongo and Bob Weaver both purchase the same stock for 100 One year later, the stock price is 110 and it pays a dividend of 5 per share Weaver decides to buy another share at 110 (he does not reinvest the 5 dividend, however) Luongo also spends the 5 per share dividend but does not transact i...

Similarities The timeweighted returns for Luongos and Weavers investments will be equal because th ...

Mario Luongo and Bob Weaver both purchase the same stock for 100. One year later, the stock

Question:

Mario Luongo and Bob Weaver both purchase the same stock for €100. One year later, the stock price is €110 and it pays a of €5 per share. Weaver decides to buy another share at €110 (he does not reinvest the €5 however). Luongo also spends the €5 per share but does not transact in the stock. At the end of the second year, the stock pays a of €5 per share but its price has fallen back to €100. Luongo and Weaver then decide to sell their entire holdings of this stock. The performance for Luongo and Weaver's investments are as follows:
Luongo: Time-weighted return = 4.77 percent
Money-weighted return = 5.00 percent
Weaver: Money-weighted return = 1.63 percent
Briefly explain any similarities and differences between the performance of Luongo's and Weaver's investments?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...