tment in stock ABC from 26/4/2017 to 31/12/2020? Give your answer as a discrete annual rate. b) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends? Give your answer as an annual continuously compounding rate. c) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends and you liquidate half of your shareholding on 31/12/2019 at a stock pri

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question

Use the price and dividend information in the following table for stock ABC to answer the following questions. a) Assuming dividends are fully reinvested (at the ex-div stock price), what is the geometric average annual return for an investment in stock ABC from 26/4/2017 to 31/12/2020? Give your answer as a discrete annual rate. b) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends? Give your answer as an annual continuously compounding rate. c) What is the IRR of an investment in stock ABC from 26/4/2017 to 31/12/2020 assuming you do not reinvest dividends and you liquidate half of your shareholding on 31/12/2019 at a stock price of $34.22? Give your answer as an annual continuously compounding rate.

 

I need Quality solution. U will get up vote for quality answer

cash
dividend
date
26/04/2017
23/06/2017 $ 0.37
19/09/2017 $ 0.25
11/01/2018
15/06/2018 $ 0.39
18/09/2018 $ 0.25
17/01/2019
18/06/2019 $ 0.39
20/09/2019 $ 0.27
7/01/2020
15/06/2020 $ 0.40
11/09/2020 $ 0.30
31/12/2020
stock
dividend
5%
10%
7%
ex-div
stock
price
$ 30.11
$ 32.68
$ 31.44
$ 32.03
$ 31.10
$32.81
$ 30.93
$33.58
$ 33.05
$ 35.52
$36.74
$ 33.64
$ 33.59
Transcribed Image Text:cash dividend date 26/04/2017 23/06/2017 $ 0.37 19/09/2017 $ 0.25 11/01/2018 15/06/2018 $ 0.39 18/09/2018 $ 0.25 17/01/2019 18/06/2019 $ 0.39 20/09/2019 $ 0.27 7/01/2020 15/06/2020 $ 0.40 11/09/2020 $ 0.30 31/12/2020 stock dividend 5% 10% 7% ex-div stock price $ 30.11 $ 32.68 $ 31.44 $ 32.03 $ 31.10 $32.81 $ 30.93 $33.58 $ 33.05 $ 35.52 $36.74 $ 33.64 $ 33.59
Expert Solution
steps

Step by step

Solved in 3 steps with 17 images

Blurred answer
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education