Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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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 the
price history of the stock are summarized below. The stock pays no dividends.
Time
0
1
2
3
Price
$ 200
220
220
220
a. Calculate the time-weighted geometric average return on this "portfolio." (Do not round intermediate calculations. Round your
answer to 2 decimal places.)
Geometric average return
Action
Buy 3 shares
Sell 1 share
Sell 1 share
Sell 1 share
Arithmetic average return
%
b. Calculate the time-weighted arithmetic average return on this portfolio. (Do not round intermediate calculations. Round your
answer to 2 decimal places.)
%
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Transcribed Image Text: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 the price history of the stock are summarized below. The stock pays no dividends. Time 0 1 2 3 Price $ 200 220 220 220 a. Calculate the time-weighted geometric average return on this "portfolio." (Do not round intermediate calculations. Round your answer to 2 decimal places.) Geometric average return Action Buy 3 shares Sell 1 share Sell 1 share Sell 1 share Arithmetic average return % b. Calculate the time-weighted arithmetic average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) %
c. Calculate the dollar-weighted average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2
decimal places.)
Dollar-weighted average return
%
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Transcribed Image Text:c. Calculate the dollar-weighted average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Dollar-weighted average return %
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