You have the following stock prices over several years. Assume that the stock pa

Question

You have the following stock prices over several years. Assume that the stock pays no dividends. Year; Beginning of Year Price; # of Shares Bought or Sold 2005; $50; 100 Bought 2006; $55; 50 Bought 2007; $51; 75 Sold 2008; $54; 75 Sold Taking into account stock purchases and sales data shown, what is the dollar weighted annual return over the entire time period? 2.87% 0.74% 2.60% 2.21% Here is what I have so far: I have calculated the Cash flows for the years... I know you are to then divide by l+IRR^n... but for some reason I'm not getting the right answer. Cash Flows 2005 2006 2007 2008 -5000 -2250 3525 4050

Explanation / Answer

Ok I can help you with this one. You made an error in your multiplication 55 * 50 is not 2,250, it's 2,750.Third one as well, 51 * 75 = $3,825 Now just do everything you did before again and you should get the answer. Hope this helps, best of luck.

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