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CFA Institute CFA-Level-I Exam - Topic 1 Question 5 Discussion

Assume an investor makes the following investments:During year one, the stock paid a $5.00 per share dividend. In year 2, the stock paid a $7.50 per share dividend. The investor’s required return is 35.0 percent.The dollar-weighted return is:
A) 48.9%.
B) 16.1%.
C) 46.5%.
D) 102.4%.

CFA Institute CFA-Level-I Exam - Topic 1 Question 5 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam
Question #: 5
Topic #: 1
[All CFA-Level-I Questions]

Assume an investor makes the following investments:

During year one, the stock paid a $5.00 per share dividend. In year 2, the stock paid a $7.50 per share dividend. The investor’s required return is 35.0 percent.

The dollar-weighted return is:

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Suggested Answer: A
by Joesph at Sep 15, 2024, 10:17 PM

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Cassandra
9 months ago
Required return is 35%, so anything over that is impressive!
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Merlyn
9 months ago
102.4%? That sounds way too high!
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Johnna
9 months ago
Definitely leaning towards option C, seems right.
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Sheridan
10 months ago
I think the dollar-weighted return is way off here.
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Novella
10 months ago
The dividends were $5.00 and $7.50.
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Brendan
10 months ago
I’m leaning towards option C, 46.5%, but I’m not completely confident. I wish I had practiced more on these types of calculations!
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Myra
10 months ago
If I recall correctly, the required return is quite high at 35%, which might skew the results. I hope I can remember the right steps to calculate it.
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Gertude
10 months ago
I think the dollar-weighted return is calculated by considering the cash flows and the timing of those dividends, but I’m a bit confused about the exact formula.
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Raymon
10 months ago
I remember we did a similar question on dollar-weighted returns in class, but I’m not sure how to apply it here.
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Tyisha
10 months ago
No problem, I've got this. I'll just plug the numbers into the formula and calculate the dollar-weighted return. Should be a breeze.
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Holley
10 months ago
Hmm, this seems straightforward enough. I'm pretty confident I can solve this using the formula for dollar-weighted return.
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Kimbery
10 months ago
Okay, let me think this through step-by-step. I'll need to consider the dividends paid in each year and the required return to figure out the right answer.
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Isadora
11 months ago
This looks like a tricky one. I'll need to carefully work through the calculations to determine the dollar-weighted return.
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Yuki
11 months ago
I'm a bit unsure about this one. The information provided seems clear, but I want to double-check my work to make sure I don't miss anything.
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Paris
11 months ago
Recruiting new team members and training is probably more relevant to the Acquire Team process, so I'm going to rule out D.
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Yvonne
2 years ago
This question is making my head spin like a fidget spinner. But I'm pretty sure the answer is C. 46.5%. Gotta love those tricky finance questions!
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Denny
2 years ago
I agree, C) 46.5% makes sense based on the investor's required return and the dividends received.
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Jessenia
2 years ago
Yeah, that calculation was a bit tricky, but C) 46.5% seems to be the correct answer.
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Chan
2 years ago
I think you're right, the answer is C) 46.5%.
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Curt
2 years ago
But the required return is 35.0 percent, so the answer should be A) 48.9%.
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Krystal
2 years ago
I disagree, I believe the answer is C) 46.5%.
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Ashley
2 years ago
D. 102.4%? That can't be right. The dividends and required return don't add up to that high of a return. I'm going with C.
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Glenn
2 years ago
I agree with you, C seems like the most logical choice based on the information given.
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Ilona
2 years ago
I'm not so sure, I still think D could be a possibility.
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Candra
2 years ago
I think you might be right, C does seem like a more reasonable option.
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Curt
2 years ago
I think the answer is A) 48.9%.
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Owen
2 years ago
Hmm, I'm not sure about this one. The dividends and required return seem a bit high. Maybe A or B is the correct answer?
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Timothy
2 years ago
I don't think D) 102.4% is the correct answer based on the information given.
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Cathern
2 years ago
I'm not sure either, but C) 46.5% could be a possibility.
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Denise
2 years ago
I'm leaning towards B) 16.1% as the correct answer.
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Mauricio
2 years ago
I think the answer might be A) 48.9%.
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Marg
2 years ago
The answer has to be C. 46.5%. The dividends and required return give us enough information to calculate the dollar-weighted return.
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Roxane
2 years ago
No, I believe it's C) 46.5%.
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Dierdre
2 years ago
I think the answer is A) 48.9%.
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