Question

(d) A fund held by an investment manager had a value of RM2 million on 1...

(d) A fund held by an investment manager had a value of RM2 million on 1 January 2019. RM2.5 million was invested on 1 May 2019. Immediately after this investment, the value of the fund was RM2.1 million. At the close of business on 31 December 2019, the value of the fund was 4.2 million.

(i) Calculate the time-weighted rate of return for 2019.

(ii) Calculate the dollar-weighted rate of return for 2019.

(iii) Comment on your answers to part (i) and (ii)

Homework Answers

Answer #1

III-) The money-weighted rate of return is sensitive to the amount and timing of cash flows and could lead to an unfair rating of the fund manager because they have no control over the amount or timing of cash flows. This effect is eliminated by the time-weighted rate of return. The money-weighted rate of return would only be superior to the TWRR if and only if the fund manager had complete control over cash flows and their timings.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are the manager of the Mighty Fine mutual fund. The following table reflects the activity...
You are the manager of the Mighty Fine mutual fund. The following table reflects the activity of the fund during the last quarter. The fund started the quarter on January 1 with a balance of $140 million. Mighty Fine Mutual Fund Monthly Data (measured at end of month) January February March Net inflows ($ million) 6.1 -4.8 0 HPR (%) -1.10 6.50 5.80 a. Calculate the quarterly arithmetic average return on the fund. (Round your answer to 2 decimal places.)...
You are the manager of the Mighty Fine mutual fund. The following table reflects the activity...
You are the manager of the Mighty Fine mutual fund. The following table reflects the activity of the fund during the last quarter. The fund started the quarter on January 1 with a balance of $80 million. Mighty Fine Mutual Fund Monthly Data (measured at end of month) January February March Net inflows ($ million) 6.7 -4.3 0 HPR (%) -0.30 6.80 6.80 a. Calculate the quarterly arithmetic average return on the fund. (Round your answer to 2 decimal places.)...
You are the manager of the Mighty Fine mutual fund. The following table reflects the activity...
You are the manager of the Mighty Fine mutual fund. The following table reflects the activity of the fund during the last quarter. The fund started the quarter on January 1 with a balance of $120 million. Mighty Fine Mutual Fund Monthly Data (measured at end of month) January February March Net inflows ($ million) 7.9 -3.3 0 HPR (%) -2.70 7.40 3.80 a. Calculate the quarterly arithmetic average return on the fund. (Round your answer to 2 decimal places.)...
This is Actuarial Science Problem 3 - Dollar-weighted and Time-weighted rate of returns An investment account...
This is Actuarial Science Problem 3 - Dollar-weighted and Time-weighted rate of returns An investment account has a value of $7000 on 1/1/2014. A deposit of XX is made on 5/1/2014, a withdrawal of $400 is made on 9/1/2014, and a deposit of $300 is made on 11/1/2014. The balance on December 31, 2014 is $8074. Find the amount of the first deposit if the dollar-weighted rate of return is 6% X= Problem 8 - Dollar-weighted and Time-weighted rate of...
Suppose you are the money manager of a $4.36 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.36 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A. 580,000. 1.50 B. 700,000. (0.50) C. 980,000. 1.25 D 2,100,000. 0.75 if the market's required rate of return is 8% and the risk-free rate is 5%, what is the fund's required rate of return?
This is actuarial science: Dollar-weighted and Time-weighted rate of returns An investment account has a value...
This is actuarial science: Dollar-weighted and Time-weighted rate of returns An investment account has a value of $2000 on 1/1/2014. On 7/1/2014, the value of the account has increased to $2022 and a deposit of X is made. On 10/1/2014, the value of the account balance is $3237 and $620 is withdrawn. On 1/1/2015, the investment account is worth $2688. Compute the time-weighted rate of return if the dollar-weighted rate of return is equal to 7.39%. iT= For an investment...
Suppose you are the money manager of a $4.36 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.36 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $   380,000 1.50 B 700,000 (0.50 ) C 980,000 1.25 D 2,300,000 0.75 If the market's required rate of return is 9% and the risk-free rate is 4%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.   %
Suppose you are the money manager of a $4.46 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.46 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $   580,000 1.50 B 400,000 (0.50 ) C 1,180,000 1.25 D 2,300,000 0.75 If the market's required rate of return is 8% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.   %______
Suppose you are the money manager of a $4.06 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.06 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $   280,000 1.50 B 500,000 (0.50 ) C 1,580,000 1.25 D 1,700,000 0.75 If the market's required rate of return is 8% and the risk-free rate is 4%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.   %
Suppose you are the money manager of a $4.98 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.98 million investment fund. The fund consists of four stocks with the following investments and betas: stock investment beta a $540,000 1.50 b 700,000 (0.50) c 1,040,000 1.25 d 2,700,000 0.75 If the market's required rate of return is 11% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT