Question

FINC 3330

XYZ stock price and dividend history are as follows:

 

YearBeginning-of-Year PriceDividend Paid at Year-End
2015
$100

$4
2016

110


4
2017

90


4
2018

95


4

 

An investor buys three shares of XYZ at the beginning of 2015, buys another two shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all four remaining shares at the beginning of 2018.

 

a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Do not round intermediate calculations. Round your answers to 2 decimal places.)





b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2015, to January 1, 2018. (Negative amounts should be indicated by a minus sign.)





b-2. What is the dollar-weighted rate of return? (Hint: If your calculator cannot calculate internal rate of return, you will have to use a spreadsheet or trial and error.) (Negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)




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