Suppose You Purchase One Share of the Stock of Cereal

question 16

Multiple Choice

Suppose you purchase one share of the stock of Cereal Correlation Company at the beginning of year 1 for $50. At the end of year 1, you receive a $1 dividend and buy one more share for $72. At the end of year 2, you receive total dividends of $2 (i.e., $1 for each share) and sell the shares for $67.20 each. The dollar-weighted return on your investment is

• A) 10.00%.
• B) 8.78%.
• C) 19.71%.
• D) 20.36%.

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Definitions:

Mets

A professional baseball team based in New York City, known officially as the New York Mets.

Red Sox

A Major League Baseball team based in Boston, Massachusetts, known for its passionate fan base and historical significance.

Proposition

A declarative statement that can be either true or false, presented as the content of belief, thought, or assertion.

Equivalent

Having equal value, function, meaning, etc., especially in a mathematical, logical, or computational context.