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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:
Suggested Answer: A
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34 comments · newest first
CA
Cassandra
10 months ago
Required return is 35%, so anything over that is impressive!
ME
Merlyn
11 months ago
102.4%? That sounds way too high!
JO
Johnna
11 months ago
Definitely leaning towards option C, seems right.
SH
Sheridan
11 months ago
I think the dollar-weighted return is way off here.
NO
Novella
11 months ago
The dividends were $5.00 and $7.50.
BR
Brendan
11 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!
MY
Myra
12 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.
GE
Gertude
12 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.
RA
Raymon
12 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.
TY
Tyisha
12 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.
HO
Holley
12 months ago
Hmm, this seems straightforward enough. I'm pretty confident I can solve this using the formula for dollar-weighted return.
KI
Kimbery
1 year 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.
IS
Isadora
1 year ago
This looks like a tricky one. I'll need to carefully work through the calculations to determine the dollar-weighted return.
YU
Yuki
1 year 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.
PA
Paris
1 year ago
Recruiting new team members and training is probably more relevant to the Acquire Team process, so I'm going to rule out D.
YV
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!
DE
Denny
2 years ago
I agree, C) 46.5% makes sense based on the investor's required return and the dividends received.
JE
Jessenia
2 years ago
Yeah, that calculation was a bit tricky, but C) 46.5% seems to be the correct answer.
CH
Chan
2 years ago
I think you're right, the answer is C) 46.5%.
CU
Curt
2 years ago
But the required return is 35.0 percent, so the answer should be A) 48.9%.
KR
Krystal
2 years ago
I disagree, I believe the answer is C) 46.5%.
AS
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.
GL
Glenn
2 years ago
I agree with you, C seems like the most logical choice based on the information given.
IL
Ilona
2 years ago
I'm not so sure, I still think D could be a possibility.
CA
Candra
2 years ago
I think you might be right, C does seem like a more reasonable option.
CU
Curt
2 years ago
I think the answer is A) 48.9%.
OW
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?
TI
Timothy
2 years ago
I don't think D) 102.4% is the correct answer based on the information given.
CA
Cathern
2 years ago
I'm not sure either, but C) 46.5% could be a possibility.
DE
Denise
2 years ago
I'm leaning towards B) 16.1% as the correct answer.
MA
Mauricio
2 years ago
I think the answer might be A) 48.9%.
MA
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.
RO
Roxane
2 years ago
No, I believe it's C) 46.5%.
DI
Dierdre
2 years ago
I think the answer is A) 48.9%.