Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 24-6 XYZ's stock price and dividend history are as follows: Beginning-of-Year Price $ 90 70 80 Dividend Paid at Year-End $ 2 Year 2016

image text in transcribed

Problem 24-6 XYZ's stock price and dividend history are as follows: Beginning-of-Year Price $ 90 70 80 Dividend Paid at Year-End $ 2 Year 2016 2017 2018 2019 2 An investor buys three shares of XYZ at the beginning of 2016, buys another two shares at the beginning of 2017, sells one share at the beginning of 2018, and sells all four remaining shares at the beginning of 2019. 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 answer to 2 decimal places. Do not round other calculations.) % Arithmetic average rate of return Geometric average rate of return % 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, 2016, to January 1, 2019. If your calculator cannot calculate internal rate of return, you will have to use trial and error.) (Round your answers to 4 decimal places. Negative amount should be indicated by a minus sign.) Dollar-weighted rate of return Problem 24-6 XYZ's stock price and dividend history are as follows: Beginning-of-Year Price $ 90 70 80 Dividend Paid at Year-End $ 2 Year 2016 2017 2018 2019 2 An investor buys three shares of XYZ at the beginning of 2016, buys another two shares at the beginning of 2017, sells one share at the beginning of 2018, and sells all four remaining shares at the beginning of 2019. 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 answer to 2 decimal places. Do not round other calculations.) % Arithmetic average rate of return Geometric average rate of return % 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, 2016, to January 1, 2019. If your calculator cannot calculate internal rate of return, you will have to use trial and error.) (Round your answers to 4 decimal places. Negative amount should be indicated by a minus sign.) Dollar-weighted rate of return

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Econometrics For Finance

Authors: Chris Brooks

3rd Edition

1107661455, 9781107661455

More Books

Students also viewed these Finance questions

Question

=+4 How would you establish a control group?

Answered: 1 week ago