The performance of an investment fund is to be evaluated over a two year period starting from 1st January 2017 . The given fund had a value of £9.21 mil on the 1st January 2017 that had increased to £14.07 mil by the 1st January 2019. During this period, the fund had received a net cash flow of £352,000 on the 1st July 2017 that was followed by a further net cash flow of £943,000 on the 1st January 2018. It is estimated that immediately before the receipt of these net cash flows the fund had a value of £9.68mil and £12.86mil, respectively. For the given 2-year valuation period calculate, to the nearest 0.1%, the following annual effective rates of return: a) The time-weighted rate of return earned on the fund; b) The money-weighted rate of return earned on the fund; c) The linked internal rate of return using sub-intervals of a calendar year. correct answers; a)=17.19117, b)=16.62410, c)=17.38913 (no tables, only formulas )
The performance of an investment fund is to be evaluated over a two year period starting from 1st January 2017 . The given fund had a value of £9.21 mil on the 1st January 2017 that had increased to £14.07 mil by the 1st January 2019. During this period, the fund had received a net cash flow of £352,000 on the 1st July 2017 that was followed by a further net cash flow of £943,000 on the 1st January 2018. It is estimated that immediately before the receipt of these net cash flows the fund had a value of £9.68mil and £12.86mil, respectively. For the given 2-year valuation period calculate, to the nearest 0.1%, the following annual effective rates of return: a) The time-weighted rate of return earned on the fund; b) The money-weighted rate of return earned on the fund; c) The linked internal rate of return using sub-intervals of a calendar year. correct answers; a)=17.19117, b)=16.62410, c)=17.38913 (no tables, only formulas )
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
Related questions
Question
The performance of an investment fund is to be evaluated over a two year period starting
from 1st January 2017 . The given fund had a value of £9.21 mil on the 1st January 2017
that had increased to £14.07 mil by the 1st January 2019. During this period, the fund had
received a net cash flow of £352,000 on the 1st July 2017 that was followed by a further
net cash flow of £943,000 on the 1st January 2018. It is estimated that immediately before
the receipt of these net cash flows the fund had a value of £9.68mil and £12.86mil,
respectively.
For the given 2-year valuation period calculate, to the nearest 0.1%, the following annual
effective rates of return :
a) The time-weighted rate of return earned on the fund;
b) The money-weighted rate of return earned on the fund;
c) The linked internal rate of return using sub-intervals of a calendar year.
correct answers; a)=17.19117, b)=16.62410, c)=17.38913 (no tables, only formulas )
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