Question
XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2016 $ 190 $ 5 2017 200 5 2018
XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2016 $ 190 $ 5 2017 200 5 2018 180 5 2019 190 5 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.) 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 the 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.)
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