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7. XYZ stock price and dividend history are as follows: Year 2010 2011 2012 2013 Beginning-of-Year Price 100 $110 $ 90 $ 95 Dividend Pald
7. XYZ stock price and dividend history are as follows: Year 2010 2011 2012 2013 Beginning-of-Year Price 100 $110 $ 90 $ 95 Dividend Pald at Year-End $4 $4 $4 $4 An investor buys three shares of XYZ at the beginning of 2010, buys another two shares at the beginning of 2011, sells one share at the beginning of 2012, and sells all four remaining shares at the beginning of 2013. (LO 5-1) a. What are the arithmetic and geometric average time-weighted ates of return for the investor? 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, 2010, to January 1, 2013. If your calculator cannot calculate internal rate of return, you will have to use a spreadsheet or trial and error.) 7. What are the expected returns for stocks X and Y? (LO 5-2) 8. What are the standard deviations of returns on stocks Xand Y?(LO 5-2) 9. Assume that of your $10,000 portfolio, you invest $9,000 in stock X and $1,000 in stock Y. What is the expected return on your portfolio? (LO 5-3)
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