Reference no: EM132722644

Smith buys 2000 shares of stock at 5.00 per share and pays a commission of 3%. Six months later he receives a cash dividend of 0.20 per share, which he immediately reinvests commission- free in shares at a price of 4.00 per share. Six months after that he buys another 1000 shares at a price of 4.50 per share, along with a commission of 3%. Six months after that he receives another cash dividend of 0.25 per share and sells his existing shares at 5.00 per share, again paying a 3% commission. Find Smith's interval rate of return for the entire transaction in the form i(2).