XYZ's stock price and dividend history are as follows:Year Beginning-of-Year Price Dividend Paid at Year-End2019202020212022$ 120150110120An investor buys three shares of XYZ at the beginning of 2019, buys another two shares at the beginning of 2020, sells one share atthe beginning of 2021, and sells all four remaining shares at the beginning of 2022.Arithmetic average rate of returnGeometric average rate of return$5Required:a. 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.)555%%Dollar-weighted rate of returnb. 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, 2019, to January 1, 2022. If your calculator cannot calculate IRR, you will have to use trial and error or aspreadsheet program.) (Round your answer to 4 decimal places. Negative amount should be indicated by a minus sign.)

The geometric average return is a tool used by analysts and investors to assess the long-term…

Answered: XYZ's stock price and dividend history…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2MAD

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