XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End...

XYZ stock price and dividend history are as follows:

Year	Beginning-of-Year Price	Dividend Paid at Year-End
2010	$ 124	$ 4
2011	$ 135	$ 4
2012	$ 115	$ 4
2013	$ 120	$ 4

An investor buys six shares of XYZ at the beginning of 2010, buys another two shares at the beginning of 2011, sells one share at the beginning of 2012, and sells all seven remaining shares at the beginning of 2013.

To compute dollar-weighted return, prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2010, to January 1, 2013. (Enter your answer as an integer. Negative amounts should be indicated by a minus sign.)

Date	Cash Flow (for the investor)
1/1/2010	?

Expert Solution


Year	Price at the begin	Dividend received at year end	return(%)
2010	$124	$4
2011	$135	$4	12.097	((135-124+4)/124)*100
2012	$115	$4	-11.852	((115-135+4)/135)*100
2013	$120	$4	7.826	((120-115+4)/115)*100

Date	net cash flow			Cumulative Number of shares
01/01/2010	-$744	[ buy 6 shares * $124 per share]	-124*6	6
01/01/2011	-$246	[ buy 2 shares * $135 per share]+[received $4 dividend*6 shares]	(-1352)+(46)	6+2=8
01/01/2012	$147	[sell one share* $115 per share]+[ received $4 dividend*8 shares]	(1115)+(84)	8-1=7
01/01/2013	$868	[sell seven share* $120 per share]+[ received $4 dividend*7 shares]	(1207)+(47)	7-7=0

Dollar weighted return is the IRR of the cash flow = 0.961%

IRR can be calculated in excel by using the IRR formula function

jeff jeffy answered 1 year ago

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XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End...

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