A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends.
|
Time
|
Price
|
Action
|
|
0
|
$ 90
|
Buy 3 shares
|
|
1
|
100
|
Sell 1 share
|
|
2
|
100
|
Sell 1 share
|
|
3
|
100
|
Sell 1 share
|
a. Calculate the time-weighted geometric average return on this "portfolio."
b. Calculate the time-weighted arithmetic average return on this portfolio.
c. Calculate the dollar-weighted average return on this portfolio.