1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
erica [24]
3 years ago
14

XYZ stock price and dividend history are as follows: YearBeginning-of-Year PriceDividend Paid at Year-End2015 $130 $5 2016 144 5

2017 120 5 2018 125 5 An investor buys six shares of XYZ at the beginning of 2015, buys another three shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all eight remaining shares at the beginning of 2018.a. What are the arithmetic and geometric average time-weighted rates of return for the investor
Business
1 answer:
Rina8888 [55]3 years ago
3 0

Answer:

Arithmetic mean = 3.67%

Geometric mean = 3.02%

Explanation:

The following sorted data are given in the question:

Year           Beginning-of-Year Price         Dividend Paid at Year-End

2015                            $130                                            $5

2016                              144                                               5

2017                              120                                               5

2018                              125                                               5

Therefore, we have:

Arithmetic average return = Sum of returns/ number of years ………....….. (1)

Geometric average return = n * ((1+r1)*(1+r2)*(1+r3)…(1+rn)^(1/n) - 1 .……….. (2)

Where;

n = years 1, 2, 3….

r1, r2, r3… are the returns for year 1, 2, 3….

Return for each year = ((Current year Beginning-of-Year Price – Previous year Beginning-of-Year Price) + dividend) / Previous year Beginning-of-Year Price .................... (3)

Using equation (3), we have:

2016 Return = ((144 - 130) + 5) /130 = 0.146153846153846

2017 Return = ((120 - 144) + 5) /159 = -0.119496855345912

2018 Return = ((125 - 120) + 5) /120 = 0.0833333333333333

Using equation (1), we have:

Arithmetic mean = (2016 Return + 2017 Return + 2018 Return) / 3 = (0.1461538461538460 - 0.1194968553459120 + 0.0833333333333333) / 3 = 0.0367, or 3.67%.

Using equation (2), we have:

Geometric mean = ((1 + 2016 Return) * (1 + 2017 Return) * (1 + 2018 Return))^(1/3) - 1 = ((1 + 0.146153846153846) * (1 - 0.119496855345912) * (1 + 0.0833333333333333))^(1/3) - 1 = 0.0302, or 3.02%

You might be interested in
Why should all small business owners develop business plans even if they are not required to obtain financing?
NISA [10]

A business plan would help small business owners to know how to operate the business, achieve goals and what activities need to be conducted in case they missed anything out. It helps a business to plan out and conduct business operations.

4 0
3 years ago
Why can internet banks offer better interest rates and lower fees than tradition banks?
Maurinko [17]
C I think bro Ishtar
6 0
3 years ago
You have just finished preparing a formal report on a proposed company merger. You are about to complete your title page. What s
USPshnik [31]

Answer:

The correct answer is letter "A":  Title; author’s name; name of report; name and organization of the receiver; author’s title; date of submission.

Explanation:

The title page is the front page that starts every formal report. It gives the first impression on how well structured the study has been compacted and provides an overall idea of what is the report going to be explaining. The correct order of information that must be included is:

  • <em>Title </em>
  • <em>Author’s name</em>
  • <em>Name of report</em>
  • <em>Name and organization of the receiver</em>
  • <em>Author’s title</em>
  • <em>Date of submission</em>

Some of them include an <em>abstract </em>at the bottom of the page adding a brief summary of the content, usually to attract the reader.

7 0
2 years ago
After a job interview, you should _____.
Lera25 [3.4K]
You should call back to check on your application progression. (but not immediately after) I hope this helps!
7 0
3 years ago
Read 2 more answers
Year 1 total cash dividends $ 20,000
velikii [3]

Answer:

bsjwiwiwiwjwsajahnuiw

Explanation:

fbheiwkwliswjiwjiwooqkandjdjnd

6 0
2 years ago
Other questions:
  • Assume that ABCO is a U.S. multinational corporation. Its foreign subsidiaries must report income in their respective countries
    12·1 answer
  • Which one of the following is a primary market transaction? Group of answer choices Sale of currently outstanding stock by a dea
    13·2 answers
  • A non-discriminating monopolist will find that marginal revenue:
    14·1 answer
  • Adirondak Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rat
    11·1 answer
  • Should protesting be allowed at Biden’s inauguration?
    14·1 answer
  • Calculate the net debt of the company based on the information below:
    15·1 answer
  • The three "R's" of socially responsible business are "reuse," " recycle," and "____."
    6·2 answers
  • Jenin recently purchased 100 shares of Tarifi's Optical common stock for $6,000. The stock is expected to provide an annual cash
    12·1 answer
  • In this unit, you learned about using the internet for business purposes. What forms of business communication rely on the inter
    13·1 answer
  • A sustainable society would emphasize A) maintaining the current rates of energy flow and resource use B) converting the world's
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!