An investor makes the following investments:
- She purchases a share of stock for $50.00.
- After one year, she purchases an additional share for $75.00.
- After one more year, she sells both shares for $100.00 each.
- There are no transaction costs or taxes.
During year one, the stock paid a $5.00 per share dividend. In year 2, the stock paid a $7.50 per share dividend. The investor’s required return is 35%. Her money-weighted return is closest to:
A. -7.5%.
B. 16.1%.
C. 48.9%.
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