Question
I invested in the Fidelity Low Price Stock Fund in 2013. Suppose the prices of the fund were $10.00, $10.77, $9.56, $10.85, and $11.12 at
I invested in the Fidelity Low Price Stock Fund in 2013. Suppose the prices of the fund were $10.00, $10.77, $9.56, $10.85, and $11.12 at the beginning of January, April, July, October, and January 2014, respectively. (a) What was the annualized return of Fidelity Low Price Stock Fund? If I only invested in the first 6 months, what was the annualized return of the fund? (b) At the beginning of 2013, I invested $1,000 in the fund. I invested another $500 at the beginning of April, and then redeemed $500 from the Fund at the beginning of July. What was my account value at the end of December? What was my annualized return? Comparing with the annualized return in the first part of (a), why are they so different? (c) Set up the equation to compute my dollar weighted annual return in (b)? Does there exist a dollar weighted return? If yes, what is it? If not, why not? (d) What was my time weighted annual return in (b)? (e) Why are your answers in (c) and (d) so different?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started