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Explanation:
The dollar-weighted rate of return is defined as the internal rate of return (IRR) on a portfolio, taking into account all cash inflows and outflows
\`$36` + \frac{\`$30`}{(1 + r)} = \frac{\`$2`}{(1 + r)} + \frac{\`$4`}{(1 + r)^2} + \frac{\`$72.90`}{(1 + r)^2}No comments yet.
Q.3137 Suppose you purchase one share of the stock of AFC Bank at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend, and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share), and sell the shares for $36.45 each. The dollar-weighted return on your investment is:
A
16.93%
B
8.0%
C
12.35%
D
7.52%