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bazaltina [42]
3 years ago
14

A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and t

he price history of the stock are summarized below. The stock pays no dividends.
Time Price Action
0 $190 Buy 3 shares
1 200 Sell 1 share
2 200 Sell 1 share
3 200 Sell 1 share
A. Calculate the time-weighted geometric average return on this "portfolio."
B. Calculate the time-weighted arithmetic average return on this portfolio.
C. Calculate the dollar-weighted average return on this portfolio.
Business
1 answer:
SSSSS [86.1K]3 years ago
5 0

Answer:

a. The Geometric average return  is 1.72%

b. The Arithmetic average return is 1.75%

c. The Dollar weighted average return is 2.61%

Explanation:

a) In order to calculate the time-weighted geometric average return we would have to calculate first the Holding period return as follows:

Holding period return = (200 - 190) / 190 = 5.263%

Hence, Geometric average return = (1 + .05263)^(1/3) - 1 = 1.72%

b) To calculate time-weighted arithmetic average return we have to make the following calculation:

Arithmetic average return = 5.263% / 3 = 1.75%

c) To calculate time-weighted arithmetic average return we would have to make the following calculation:

Dollar weighted average return=-190*3 + 200/(1+r) + 200/(1+r)^2 + 200 / (1+r)^3 = 0

= 2.61%

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Explanation:

The solution or answer to this exam or problem or question can be seen or found in the first sentence of the question, that is;

"Total Accounting has developed new software for nonprofit organizations that allows them to send DONORS receipts via text or email".

Take note of the capitalized word, " donors" because that is the simplest answer to the question.

Therefore, the software was built and designed for people that are going to be donating or giving back to the society. The software is built in such a way that the Total Accounting marketing team can track who donors are.

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Answer:

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Explanation:

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With only two goods, if the income effect is in the same direction as the substitution effect then the good is ____.
Leya [2.2K]

Answer:

Normal good

Explanation:

Income effect Is change in quantity demanded when the consumers purchasing power change as a result of a change in real income.

Substitution effect is when quantity demanded falls as a result of rise in price of a good which leads consumers to purchase cheaper alternatives.

A normal good is a good whose demand increases as income increases.

If the price of a normal good falls, the real purchasing power of the consumer increases and the consumer buys more of the good. Also, the consumer substituites from more expensive alternative goods to the more cheap normal good. The income and substitution effect both move in the same direction.

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Instrumentality.

Since Rick believes that working hard will result in better incentives and his attitude towards these incentives is not known, we can say that in the context of expectancy theory of motivation, that this scenario best reflects the factor of <u>instrumentality</u>.

Vroom's expectancy theory of motivation attempts to explain that people choose to perform certain actions over other in a manner that aims to maximize pleasure and reduce pain to lowest possible extent.

There are three factors that affect motivation : expectancy, instrumentality and valence.

Expectancy : refers to the belief of working harder with the expectation of attaining the goals set within an organization.

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