CFA Institute Exam CFA-Level-I Topic 1 Question 5 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam

Question #: 5
Topic #: 1

Assume an investor makes the following investments:

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 investorâ€™s required return is 35.0 percent.

The dollar-weighted return is:

A48.9%.

B16.1%.

C46.5%.

D102.4%.

Show Suggested Answer

Suggested Answer: A

by Joesph at Sep 15, 2024, 10:17 PM

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Yvonne

6 months ago

This question is making my head spin like a fidget spinner. But I'm pretty sure the answer is C. 46.5%. Gotta love those tricky finance questions!

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Denny

5 months ago

I agree, C) 46.5% makes sense based on the investor's required return and the dividends received.

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Jessenia

5 months ago

Yeah, that calculation was a bit tricky, but C) 46.5% seems to be the correct answer.

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Chan

5 months ago

I think you're right, the answer is C) 46.5%.

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Curt

6 months ago

But the required return is 35.0 percent, so the answer should be A) 48.9%.

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Krystal

7 months ago

I disagree, I believe the answer is C) 46.5%.

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Ashley

7 months ago

D. 102.4%? That can't be right. The dividends and required return don't add up to that high of a return. I'm going with C.

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Glenn

6 months ago

I agree with you, C seems like the most logical choice based on the information given.

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Ilona

6 months ago

I'm not so sure, I still think D could be a possibility.

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Candra

6 months ago

I think you might be right, C does seem like a more reasonable option.

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Curt

7 months ago

I think the answer is A) 48.9%.

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Owen

7 months ago

Hmm, I'm not sure about this one. The dividends and required return seem a bit high. Maybe A or B is the correct answer?

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Timothy

6 months ago

I don't think D) 102.4% is the correct answer based on the information given.

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Cathern

6 months ago

I'm not sure either, but C) 46.5% could be a possibility.

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Denise

6 months ago

I'm leaning towards B) 16.1% as the correct answer.

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Mauricio

7 months ago

I think the answer might be A) 48.9%.

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Marg

7 months ago

The answer has to be C. 46.5%. The dividends and required return give us enough information to calculate the dollar-weighted return.

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Roxane

7 months ago

No, I believe it's C) 46.5%.

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Dierdre

7 months ago

I think the answer is A) 48.9%.

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