Question
#3: Now, it is end of 2018, Ron has been investing with Bloom mutual fund for 4 years now. This morning, Ron was reviewing his
#3: Now, it is end of 2018, Ron has been investing with Bloom mutual fund for 4 years now. This morning, Ron was reviewing his investment statements and show the following information (Please ignore any fund expenses info. in solving this question)
Year | Beginning balance | Ending balance | Dividends per share | ||
No. Shares | Share price | No. Shares | Share price | ||
2015 | 20,000 | 15 | 20,000 | 16 | 0.50 |
2016 | 20,625 | 16 | 20,625 | 13.75 | 0.60 |
2017 | 21,525 | 13.75 | 21,525 | 17 | 0.632 |
2018 | 22,325 | 17 | 22,325 | 18 | 0.80 |
(please notice that the dividends received at the end of each year have been used to purchase new shares at the beginning of the following year)
A. what is HPR of Ron in 2015?
- 6.67%
- 10%
- 6.25%
- 8.9%
B. What is the HPR of Ron during his entire investment horizon 2015-2018 (Please notice that Ron has been reinvesting his entire proceeds from dividends during years 2015,2016, and 2017 in the fund once they are received)?
- 28%
- 41.4%
- 39.9%
- 59.3%
C. What is the arithmetic average annual return of Ron during the period 2015-2018?
- 8.54%
- 5.53%
- 6.52%
- 9.63%
D. What is the Geometric average annual return of Ron during the period 2015-2018?
- 2.8%
- 8.76%
- -8.77%
- 8.52%
E. What is the dollar weighted average return of Ron during the period 215-2018?
- 7.58%
- 8.76%
- 10.38%
- 11.53%
F. Assuming that the dollar weighted return is Rons nominal rate of return, what is Rons real rate of return if the annual rate of inflation during the investment period is 3%?
- 5.59%
- 11.76%
- 10.76%
- 1.92%
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