Question

Jenna purchased 500 shares of XYZ stock for $10 per share. The stock paid the following dividends: Year 1: $0.25 per share Year 2: $0.27 per share Year 3: $0.29 per share Assume the stock is trading for $15 per share at the end of Year 3. Calculate the time-weighted return for XYZ stock over this period.

Answer 1

Based on the price of the stock and the dividend over the years, the time-weighted return of XYZ stock is 16.83%.

What is the time-weighted return of XYZ stock?

In this case, the Time weighted return can will be the same as the IRR so the IRR function on a spreadsheet can be used to find the return.

Year 0 return = -$10 per share

Year 1 = $0.25

Year 2 = $0.27

Year 3 = (0.29 + 15) = $15.29.

Time weighted return will be 16.83% as shown in the attachment.

Find out more on Weighted return at brainly.com/question/15885163.