Suppose you purchase one share of the stock of IBM at the beginning of year 1 for $36

Finance Jan 13, 2022

Suppose you purchase one share of the stock of IBM 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

12.35%.

8.00%.

-1.75%.

8.53%.