Question

Thomas Partner purchased shares of Bad Wolf Industries on the open January 2 at $116.26 per share. He earned a dividend of $0.41 in March. Thomas kept his dividend in cash - he did not reinvest it. Bad Wolf Industries closed at January: $119.90 February: $123.58 March: $122.08 The total time-weighted rate of return for the calendar quarter is:__________

Answer 1

Answer:

time weighted rate of return: 5.36%

Explanation:

We have to calculate the holding rate of return for each month and then mutiply them together:

January:

(119.90 - 116.26)/116.26 = 0.031309135

February:

(123.58-119.9)/119.9 = 0.030692244

March:

(0.41 + 122.08-123.58)/123.58 =  - 0.0088194

(1 + Jan) (1 + Feb) (1 + March) = 1.053587547

now we subtract one to get the wanted rate:

time weighted rate of return: 5.36%