On January 1, 1997, a stock portfolio is worth $100 thousand. On September 30, 1997, $8.9 thousand is withdrawn from the portfolio, and immediately after this withdrawal the portfolio has a value of $105 thousand. Twelve months later, the value of the portfolio is $108 thousand, and the investor adds $3 thousand worth of stock to his portfolio. On December 31, 1998, the portfolio is worth $100 thousand. Over the two-year period, the annual time-weighted rate of return is X and annual dollar-weighted rate of return is Y. Find |X-Y|

On January 1, 1997, a stock portfolio is worth $100 thousand. On September 30, 1997, $8.9 thousand is withdrawn from the portfolio, and immediately after this withdrawal the portfolio has a value of $105 thousand. Twelve months later, the value of the portfolio is $108 thousand, and the investor adds $3 thousand worth of stock to his portfolio. On December 31, 1998, the portfolio is worth $100 thousand. Over the two-year period, the annual time-weighted rate of return is X and annual dollar-weighted rate of return is Y. Find |X-Y|

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 17P

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