XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2016 $ 80 $ 2 2017 90 2 2018 70 2 2019 80 2 An investor buys three shares of XYZ at the beginning of 2016, buys another two shares at the beginning of 2017, sells one share at the beginning of 2018, and sells all four remaining shares at the beginning of 2019. a. What are the arithmetic and geometric average time-weighted rates of return for the investor?
Calculate the average and geometric return as follows:
Formulas:
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