Question

Suppose you purchase one share of the stock of Red Devil Corporation at the beginning of year 1 for $46.75. At the end of year 1, you receive a dividend of $2, and buy one more share for $50.75. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share), and sell the shares for $58.75 each.

What is the time-weighted return on your investment? (Round your answer to 2 decimal places. Do not round intermediate calculations.)

Answer 1

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01:47 C W ENG 99+ 22-03-2020 17 Х x KL105 . KE KE KG KH KI КJ KK KL KM KN KO KP KQ KR 82 83 84 85 86 87 88 89 90 TIME WEIGHTED RETURN 91 92 93 YEAR PRICE DIVIDEND RETURN 0 94 95 96 46.75 50.75 1 2 12.83% [(50.75 + 2-46.75)/46.75] 19.70% [(58.75 +2 - 50.75)/50.75] 2 58.75 2 97 98 TIME WEIGHTED RETURN = ((1+r1)*(1+r2))^(1/2) - 1 TIME WEIGHTED RETURN = ((1+0.1283)*(1+0.1970))^(1/2) - 1 ANSWER TIME WEIGHTED RETURN = 16.22% [IT IS ALSO CALLED GEOMETRIC RETURN] 99 100 101 102 103 104 105 RATIO PI PBP ARR invest, EAA REPLACEMENTS IRRnpvbeta HPR GMAM EAC MACRS RELEVANT MI-np-ir NPV BETA LEVERED REPLACEMENT BONE ... (+) :