ZuoTi.Pro
Question

Please solve it by hand or typing, don't use EXCEL.

1. XYZ stock price and dividends history are as follows Year Beginning-of-year price Dividend paid at year- $100 $110 $90 $95 end $4 $4 $4 $4 2005 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008. Hint: When the investor buys three shares at the beginning of 2005, she cannot receive dividends paid at the end of 2004. She can receive dividend payments on these three shares at the end of 2005 A. Computer HPR for each period (05-06, 06-07, and 07-08) (6pts) B. Compute the arithmetic return. (3pts) C. Compute the geometric return. (3pts) D. Computer the dollar-weighted rate of return. Draw the time line to show cash flows. Write down the formula and calculate the dollar-weighted rate of return. The time line includes four dates corresponding to the turns of the year for January 1, 2005 to January 1, 2008. (8pts)

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

YEAR SHARE(BUY/ SALE) PRICE DIVIDEND

2005 3 $100    $4

2006 2 $110    $4

2007 (1) $90 $4

2008 (4) $95 $4

0

NOTE: WE ASSUMED THAT DIVIDEND AT THE END OF THE YEAR IS PER SHARE $ 4

1. HOLDING PERIODS RETURN

YEAR   

2005-2006 3 * $4 = $12

2006-2007 5 * $4 = $20

2007-2008 4 *$4 = $16

2007-2008 $90- $105 = (15) SO HOLDING PERIODS RETURN FOR 2007-08 $16- $15 = $1

2008-2009 ($95- $105)*3 = (30) SO HOLDING PERIODS RETURN FOR 2008-09 $15

TOTAL HPR = $20+$16+$1-$30 = $7

W.K. AVERAGE PRICE FOR SELLING AT THE BEGINNING OF THE YEAR 2007-2008

100+110 / 2 = 105

2. ARITHMETIC RETURN:-

BUYING AVG. COST = 105 * 5 = 525

SELLING = 90+95/2 * 5   = 462.5

NET = 62.5

+ DIVIDEND RECIVED = $48

NET PROFIT = (14.5)

0 0
Add a comment
Know the answer?
Add Answer to:
Please solve it by hand or typing, don't use EXCEL. 1. XYZ stock price and dividends...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Please solve it by hand or typing, don't use EXCEL. 1. XYZ stock price and dividends...

    Please solve it by hand or typing, don't use EXCEL. 1. XYZ stock price and dividends history are as follows Year Beginning-of-year price Dividend paid at year- $100 $110 $90 $95 end $4 $4 $4 $4 2005 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008....

  • Please answer the Question by hand or typing, don't use Excel. 1. XYZ stock price and...

    Please answer the Question by hand or typing, don't use Excel. 1. XYZ stock price and dividends history are as follows Year Beginning-of-year price Dividend paid at year- $100 $110 $90 $95 end $4 $4 $4 $4 2005 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of...

  • Please solve it by hand or typing, don't use EXCEL. For D Draw the time line...

    Please solve it by hand or typing, don't use EXCEL. For D Draw the time line to show cash flow. 1. XYZ stock price and dividends history are as follows Year Beginning-of-year price Dividend paid at year- $100 $110 $90 $95 end $4 $4 $4 $4 2005 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and...

  • 1. XYZ stock price and dividends history are as follows: Year Beginning-of-year price Dividend paid at...

    1. XYZ stock price and dividends history are as follows: Year Beginning-of-year price Dividend paid at year- end $4 $4 $4 $4 2005 $100 $110 $90 $95 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008. Hint When the investor buys three shares at the beginning...

  • 1. XYZ stock price and dividends history are as follows Year Beginning-of-year price Dividend paid at...

    1. XYZ stock price and dividends history are as follows Year Beginning-of-year price Dividend paid at year- $100 $110 $90 $95 end $4 $4 $4 $4 2005 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008. Hint: When the investor buys three shares at the beginning...

  • XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End...

    XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2013 $ 110    $ 4 2014 120    4 2015 100    4 2016 110    4 An investor buys three shares of XYZ at the beginning of 2013, buys another two shares at the beginning of 2014, sells one share at the beginning of 2015, and sells all four remaining shares at the beginning of 2016. a. What are the arithmetic and...

  • XYZ stock price and dividend history are as follows: Dividend Paid at Year-End Year 2015 2016...

    XYZ stock price and dividend history are as follows: Dividend Paid at Year-End Year 2015 2016 2017 2018 Beginning-of-Year Price $102 105 91 An investor buys three shares of XYZ at the beginning of 2015, buys another one shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all three remaining shares at the beginning of 2018. a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Do not...

  • XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End...

    XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2016 $ 200 $ 6 2017 220 6 2018 185 6 2019 200 6 An investor buys three shares of XYZ at the beginning of 2016, buys another two shares at the beginning of 2017, sells one share at the beginning of 2018, and sells all four remaining shares at the beginning of 2019. a. What are the arithmetic and geometric average time-weighted rates...

  • XYZ stock price and dividend history are as follows Beginning-of-Year Dividend Paid at Year Price $138...

    XYZ stock price and dividend history are as follows Beginning-of-Year Dividend Paid at Year Price $138 156 Year End 2015 2016 130 2017 135 2018 An investor buys five 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 seven remaining shares at the beginning of 2018 a. What are the arithmetic and geometric average time-weighted rates of return for the investor?...

  • Please solve it by hand or typing, don't use EXCEL . 1. The following data was...

    Please solve it by hand or typing, don't use EXCEL . 1. The following data was downloaded from Professor Kenneth French's website. The table shows the annual return of the U.S. stock market including NYSE, NASDAQ and Amex over the 10 years. (15pts) Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Return (%) -16.97-15.12-22.47 32.12 11.82 4.34 11.4 263-39 96 3158 1) What would be your expected return of the stock market in 2010 based on the...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT