Problem: XYZ stock price and dividend history are as follows:
|
Year
|
Beginning-of-Year Price
|
Dividend Paid at Year-End 2010
|
| |
$ 110
|
$ 3
|
|
2011
|
$ 113
|
$ 3
|
|
2012
|
$ 100
|
$ 3
|
|
2013
|
$ 105
|
$ 3
|
An investor purchases four shares of XYZ at the starting of 2010, buys another two shares at the starting of 2011, sells one share at the starting of 2012, and sells all five remaining shares at the starting of 2013.
Required:
a. What are the geometric and arithmetic average time-weighted rates of return for the investor?
b. Prepare a chart of cash flows for the four dates corresponding to turns of year for January 1, 2010, to January 1, 2013.
c. What is dollar-weighted rate of return?