Reference no: EM133069344

An investor bought 3 shares of stock A in 2010 after ex-dividend date.  She purchased 2 more shares in 2011, sold 1 share in 2012 and then sold all her holding in 2013 after ex-div date. The stock paid $2 dividend per share at the end of each year.

Beg-of-year	stock price	# new shares purchased (sold)
2010	$100	3
2011	$110	2
2012	$90	-1
2013	$95	-4

1) She can receive $_______ dividend payment at the beg-of-year 2012.

2) Continued with previous question. The investor's net cash flow is $_____ at the beg-of-2013

3) The IRR of the investment is _____ %

4) Continued with previous question. The arithmetic average of the investment's yearly return during 2010-2013 is _____ %

5) Why the investment's arithmetic average return is positive while its money weighted average return is negative?

a) The investor purchased at lower price and sold at higher price on average.

b) The worst yearly return occurred when the investor held more shares.

c) The worst yearly return occurred when the investor held fewest shares.