Author Question: If a stock is purchased at the beginning of a year, a single dividend is paid at the end of the year ... (Read 54 times)

dongbo · **on:** Mar 29, 2022

Question 1

Eli purchased an investment for $1,000. It generated the following stream of cash flows.

End of year 1	$300
End of year 2	$400
End of year 3	$500

His internal rate of return was
◦ 10.65%.
◦ 6.67%.
◦ 9.70%.
◦ 8.90%.

Question 2

If a stock is purchased at the beginning of a year, a single dividend is paid at the end of the year and the stock is sold immediately after the dividend has been received. In this case
◦ the internal rate of return is lower than the holding period return.
◦ the holding period return. is lower than the internal rate of return.
◦ it is not possible to calculate the internal rate of return.
◦ the internal rate of return equals the holding period return.

kalimarie · **Reply #1 on:** Mar 29, 2022

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