Three years ago you bought 200 shares of stock trading at $40 per share. One year...

90.2K

Verified Solution

Question

Basic Math

Three years ago you bought 200 shares of stock trading at $40per share. One year after you bought the stock, it paid a dividendof $2 per share, which you then immediately reinvested inadditional (fractional) shares of stock (at a price of $45 pershare, which was the price immediately after the dividend waspaid). There were no other dividends or cash flows, and today thestock sells for $52 per share. What is the annualized time-weightedreturn (i.e, geometric average annual return or CAGR)? Express youranswer in decimal form, rounded and accurate to 5 decimal places(e.g., 0.12345).

Answer & Explanation Solved by verified expert

3.8 Ratings (556 Votes)

The TWR 1 1 1 1We will divide the transactions into 2 period1st Buying share to getting dividends2nd Reinvesting the dividends to selling the shares1st In the beginning I invested 40 in 200 shares each 20040 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