Question: Calculating Average Returns Assume AAA stock price evolves as follows: Year Buy or Sell Shares Price at Beginning of Year Dividend paid at Year End

  1. Calculating Average Returns

Assume AAA stock price evolves as follows:

Year

Buy or Sell Shares

Price at Beginning of Year

Dividend paid at Year End

2012

Buy 500 shares

$35

$1.20

2013

Sell 200 shares

$48

$2.00

2014

Buy 100 shares

$21

$2.30

2015

Sell 400 shares

$50

$1.00

  1. What is the dollar-weighted return (IRR) for the four-year period?
  2. What is the time-weighted return- arithmetic average? Geometric average?

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