Show both geometric and arithmetic average return

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Reference no: EM132064005

Shares of AAA Corporation pay a dividend of £2 at the end of each year on December 31. An investor buys two shares of the stock on January 1 at a price of £20 each. This investor sells one of those two shares for £22 a year later on the next January 1, and sells the second share an additional year later for £19. Find the time- and dollar-weighted rates of return on the 2-year investment. Please show both geometric and arithmetic average return for the time-weighted rates of return.

Reference no: EM132064005

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