7. On 1 January 2005 an investment fund is worth £120,000. On 1 January 2006 the value has increased to £128,000 and a new investor joins the fund and deposits £10,000. On 1 January 2007 the value has decreased to £130,000 and £30,000 is withdrawn. On 1 January 2008 the investment funds is worth £110,000. (a) Compute the rate of return (rounded to a percentage point) by both the money-weighted and the time-weighted method. Why is the time-weighted rate of return higher?

7. On 1 January 2005 an investment fund is worth £120,000. On 1 January 2006 the value has increased to £128,000 and a new investor joins the fund and deposits £10,000. On 1 January 2007 the value has decreased to £130,000 and £30,000 is withdrawn. On 1 January 2008 the investment funds is worth £110,000. (a) Compute the rate of return (rounded to a percentage point) by both the money-weighted and the time-weighted method. Why is the time-weighted rate of return higher?

Intermediate Algebra

19th Edition

ISBN:9780998625720

Author:Lynn Marecek

Publisher:Lynn Marecek

Chapter12: Sequences, Series And Binomial Theorem

Section12.3: Geometric Sequences And Series

Problem 12.58TI: What is the total effect on the economy of a government tax rebate of $500 to each household in...

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