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You are a fixed term interest rate portfolio manager and have been advised that cash inflows for the fund are expected to be, $15 million now; a further $25 million is to be added to the initial investment in one years’ time, followed by a further $10 million at the beginning of the next year. These investments are made annually at the beginning of each successive year. The market is expected to provide annual returns of 7.5%, 1.5%, 5.5%% for each successive year. A. Calculate the annualised Time Weighted Rate of Return (TWRR) and the Money Weighted Rate of Return (MWRR) provided over the three-year term B. What do these calculations tell you about the timing of the investment decisions?

You are a fixed term interest rate portfolio manager and have been advised that cash inflows for the fund are expected to be, $15 million now; a further $25 million is to be added to the initial investment in one years’ time, followed by a further $10 million at the beginning of the next year. These investments are made annually at the beginning of each successive year. The market is expected to provide annual returns of 7.5%, 1.5%, 5.5%% for each successive year. A. Calculate the annualised Time Weighted Rate of Return (TWRR) and the Money Weighted Rate of Return (MWRR) provided over the three-year term B. What do these calculations tell you about the timing of the investment decisions?

Essentials Of Investments
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
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You are a fixed term interest rate portfolio manager and have been advised that cash inflows for the fund are expected to be, $15 million now; a further $25 million is to be added to the initial investment in one years’ time, followed by a further $10 million at the beginning of the next year. These investments are made annually at the beginning of each successive year. The market is expected to provide annual returns of 7.5%, 1.5%, 5.5%% for each successive year.

A. Calculate the annualised Time Weighted Rate of Return (TWRR) and the Money Weighted Rate of Return (MWRR) provided over the three-year term

B. What do these calculations tell you about the timing of the investment decisions?

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