XYZ stock price and dividend history are as follows: Year _ Beginning-of-Year Price _ Dividend Paid at

Question:

XYZ stock price and history are as follows:
Year _________ Beginning-of-Year Price _________ Paid at Year-End
2010 ........................ $100 ......................................... $4
2011 ........................ $110 ......................................... $4
2012 ........................ $ 90 .......................................... $4
2013 ........................ $ 95 .......................................... $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.
a. What are the arithmetic and geometric average time-weighted rates 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.)
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...