A client invested $100 in a mutual fund at the start of the month. After 20 days, the portfolio gained 10% (i.e., value = $110), and the client added an extra $50 (total portfolio value=$160). From day 20 to day 30, the portfolio lost 9.09%--the final portfolio value is $160×(1-0.0909)=$145.46. Calculate the money-weighted return and time-weighted return. Which rate of should you use to evaluate the performance of the mutual fund manager?
A client invested $100 in a mutual fund at the start of the month. After 20 days, the portfolio gained 10% (i.e., value = $110), and the client added an extra $50 (total portfolio value=$160). From day 20 to day 30, the portfolio lost 9.09%--the final portfolio value is $160×(1-0.0909)=$145.46. Calculate the money-weighted return and time-weighted return. Which rate of should you use to evaluate the performance of the mutual fund manager?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Problem 1. A client invested $100 in a mutual fund at the start of the month. After 20 days, the portfolio gained 10% (i.e., value = $110), and the client added an extra $50 (total portfolio value=$160). From day 20 to day 30, the portfolio lost 9.09%--the final portfolio value is $160×(1-0.0909)=$145.46. Calculate the money-weighted return and time-weighted return. Which rate of should you use to evaluate the performance of the mutual fund manager?
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