fafan
Sep 24, 2009, 06:32 AM
XYZ stock price and dividend history are as follows:
Year Beginning-of-year price Dividend Paid at year-End
2005 $100 $4
2006 $110 $4
2007 $90 $4
2008 $95 $4
An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008.
Requirements1:
What are the arithmetic and geometric average time-weghted rates for return for the investor?
Requrement2:
(a) What is the dollar-wighted rate of return?
(b) Prepare a chart of cash flows for te four dates corresponnding to the turns of the year for January 1, 2005, to January 1, 2008.
Year Cash flow
2005 $_____________
2006 $_____________
2007 $_____________
2008 $______________
Year Beginning-of-year price Dividend Paid at year-End
2005 $100 $4
2006 $110 $4
2007 $90 $4
2008 $95 $4
An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008.
Requirements1:
What are the arithmetic and geometric average time-weghted rates for return for the investor?
Requrement2:
(a) What is the dollar-wighted rate of return?
(b) Prepare a chart of cash flows for te four dates corresponnding to the turns of the year for January 1, 2005, to January 1, 2008.
Year Cash flow
2005 $_____________
2006 $_____________
2007 $_____________
2008 $______________