Question

You've recorded the following prices and dividend payments for a stock:

Quarter	Stock price (end of quarter)	Dividend per share (end of quarter)	Shares bought or sold (after dividend payment)	Shares held (before div. payment)
0	61.32		4	0
1	99.25	3.65	1	4
2	83.54	3.65	0	5
3	111.72	3.65	-2	5
4	79.01	3.65	-3	3

What was the dollar-weighted (money-weighted) rate of return?

Answer 1

Quarter	Stock price (end of quarter)	Dividend per share (end of quarter)	Shares bought or sold (after dividend payment)	Shares held (before div. payment)	Cash flows	formula	remarks
0	61.32		4	0	-245.28	[-61.32*4]
1	99.25	3.65	1	4	-84.65	(-99.25*1)+(3.65*4)	[ bought 1 ahsre at 99.25+ received dividend on 4 hares]
2	83.54	3.65	0	5	18.25	[3.65*5]	[ Received dividend on 5 hares]
3	111.72	3.65	-2	5	241.69	(111.72*2)+(3.65*5)	[ sold 2 shares at 111.72 each + received dividend on 5 shares, because ahsres has been sold after receiving the dividend]
4	79.01	3.65	-3	3	247.98	(79.01*3)+(3.65*3)	[ sold 3 shares at 79.01 each + received dividend on 3 shares, because shares has been sold after receiving the dividend]

Dollar weighted rate of return is the rate at which ,

Discounted PV of the cash inflows+ Discounted PV of the cash out flow = 0

It is also known as the IRR or internal rate of return.

IRR can be calculated in exxcel by IRR function

here IRR or Money weighted rate of return = 14.5%