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​​​​​​​Mathematical Interest Theory You buy $4,000 worth of stock. Six months later, the value of the...

​​​​​​​Mathematical Interest Theory

  1. You buy $4,000 worth of stock. Six months later, the value of the stock has risen to $4,400, and you buy another $2,000 worth of stock. After another eight months, your holdings are worth $5,400, and you sell off $1600 of them. Ten months later, your stock has a value of $4,200.
    1. Compute the annual time-weighted yield rate of the stock over the two-year period.
    2. Compute the annual dollar-weighted yield over the two-year period.
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Answer:

a) 1.28%

b) 2.09%

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