Why do the rates of return differ

Reference no: EM13274691

You purchase a stock for $ 100 that pays an annual dividend of $ 5.50. At the beginning of the second year, you purchase an additional share for $ 130. At the end of the second year, you sell both shares for $ 140. Determine the dollar- weighted return and the time- weighted compounded ( i. e., geometric) return on this investment. Repeat the process but assume that the second share was purchased for $ 110 instead of $ 130. Why do the rates of return differ?

Reference no: EM13274691

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