XYZ's stock price and dividend history are as follows:Year2018201920202021Beginning-of-YearPrice$ 132158119132Dividend Paid atAn investor buys three shares of XYZ at the beginning of 2018, buys another two shares at the beginning of 2019, sells one share atthe beginning of 2020, and sells all four remaining shares at the beginning of 2021.Arithmetic average rate of returnGeometric average rate of returnYear-End$4444a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates ofreturn and final answers to 2 decimal places. Do not round other calculations.)Dollar-weighted rate of return%0.13 %b. What is the dollar-weighted rate of return? (Hint. Carefully prepare a chart of cash flows for the four dates corresponding to the turnsof the year for January 1, 2018, to January 1, 2021. If your calculator cannot calculate internal rate of return, you will have to use trialand error.) (Round your answer to 4 decimal places. Negative amount should be indicated by a minus sign.)12.8500 %

The rate of return provides valuable insights for investors in evaluating investment performance,…

Answered: XYZ's stock price and dividend history…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 1FIC

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