A manager buys three shares of stock today, and then sells one of those shares each...

90.2K

Verified Solution

Question

Finance

A manager buys three shares of stock today, and then sells oneof those shares each year for the next 3 years. His actions and theprice history of the stock are summarized below. The stock pays nodividends.
Time Price Action
0 $ 125 Buy 3 shares
1 145 Sell 1 share
2 145 Sell 1 share
3 145 Sell 1 share
a. Calculate the time-weighted geometricaverage return on this portfolio. (Do notround intermediate calculations. Round your answer to 2 decimalplaces.)
b. Calculate the time-weighted arithmeticaverage return on this portfolio. (Do not roundintermediate calculations. Round your answer to 2decimal places.)
c. Calculate the dollar-weighted average returnon this portfolio. (Do not round intermediate calculations.Round your answer to 2 decimal places.)

Answer & Explanation Solved by verified expert

4.4 Ratings (837 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

A manager buys three shares of stock today, and then sells oneof those shares each year for the next 3 years. His actions and theprice history of the stock are summarized below. The stock pays nodividends.TimePriceAction0$125Buy 3 shares1145Sell 1 share2145Sell 1 share3145Sell 1 sharea. Calculate the time-weighted geometricaverage return on this portfolio. (Do notround intermediate calculations. Round your answer to 2 decimalplaces.)b. Calculate the time-weighted arithmeticaverage return on this portfolio. (Do not roundintermediate calculations. Round your answer to 2decimal places.)c. Calculate the dollar-weighted average returnon this portfolio. (Do not round intermediate calculations.Round your answer to 2 decimal places.)

Time	Price		Action
0	$	125	Buy 3 shares
1		145	Sell 1 share
2		145	Sell 1 share
3		145	Sell 1 share