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:

Bolsheviks

A faction of the Russian socialist movement that led the October Revolution in 1917, establishing the Soviet government.

Mensheviks

A faction within the Russian socialist movement that emerged from the Russian Social Democratic Labour Party, opposing the Bolsheviks and favoring a democratic approach to socialism.

Russian Civil War

A tumultuous period of warfare and political upheaval that saw the Bolshevik forces clashing with a coalition of monarchists, capitalists, and other socialist factions, reshaping Russia's political landscape.