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Suppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share) and sell the shares for $36.45 each. The dollar-weighted return on your investment is:
Multiple Choice
−1.75%.
4.08%.
8.53%.
12.35%.

Answer :

The return on your investment, dollar-weighted, is 8.53 percent.

What exactly is the dollar-weighted return rate?

Definition of Dollar-Weighted Rate of Return (DWRR): a fund's long-term return, unaffected by contributions or withdrawals. measures the compound growth rate of a fund over a predetermined time period.

Year 1: ( $30 + $2 − $36)/$36 = −11.11%; Year 2: ( $36.45 + $2 − $30)/$30 = 28.17%; Average: 8.53%.

What was the money-weighted dollar-weighted return rate?

The rate of return at which discounted cash inflows and outflows are equal is known as the dollar-weighted return. The internal rate of return and the money-weighted return are the same thing.

To learn more about DWRR here

https://brainly.com/question/16260454

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