Problem 24-6 (Algo)XYZ's stock price and dividend history are as follows:Beginning ofYear Price$ 110Year2020202120222023120100110Dividend Paidat Year-End$4An investor buys three shares of XYZ at the beginning of 2020, buys another two shares at the beginning of 2021, sells one share atthe beginning of 2022, and sells all four remaining shares at the beginning of 2023.Required:a. What are the arithmetic and geometric average time weighted rates of return for the investor?Note: Round your year-by-year rates of return and final answers to 2 decimal places. Do not round other calculations.b. What is the dollar-weighted rate of return? (Hint Carefully prepare a chart of cash flows for the four dates corresponding to theturns of the year for January 1, 2020, to January 1, 2023. If your calculator cannot calculate internal rate of return, you will have touse trial and error.)Note: Round your answer to 4 decimal places. Negative amount should be indicated by a minus sign.a.Arithmetic average rate of returna. Geometric average rate of returnb. Dollar-weighted rate of return%%%4

Beginning of year price:2020 = $1102021=$1202022=$1002023=$110Dividend for each year:2020 = $42021=…

Answered: Problem 24-6 (Algo) XYZ's stock price…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter7: Stocks (equity) - Characterstics And Valuation

Section: Chapter Questions

Problem 4PROB

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