$1,000 is invested in a fund at the beginning the year. The fund rate of return is 8% for the first half of the year, and 10% for the second half. You are given the following methods of determining return, given the indicated transactions: ScenarioReturn Measure Midyear Transaction Dollar-weighted$500 deposit Dollar-weighted$500 withdrawal Time-weighted $500 deposit II II

$1,000 is invested in a fund at the beginning the year. The fund rate of return is 8% for the first half of the year, and 10% for the second half. You are given the following methods of determining return, given the indicated transactions: ScenarioReturn Measure Midyear Transaction Dollar-weighted$500 deposit Dollar-weighted$500 withdrawal Time-weighted $500 deposit II II

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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$1,000 is invested in a fund at the beginning of the year. The fund rate of return is 8% for the first half of the year, and 10% for the second half. You are given the following methods of determining return, given the indicated transactions: Scenario Return Measure Midyear Transaction I Dollar-weighted $500 deposit II Dollar-weighted $500 withdrawal III Time-weighted $500 deposit IV Time-weighted $500 withdrawal Rank the rates of returns under these scenarios. A. I < II = IV < III B. II < III = IV < I C. III < I = II < IV D. IV < I = II < III E. None of these answers is correct.
An Active manager of AMF Fund has delivered the following six -monthly returns in the last 5 Years versus the Benchmark NIFTY Calculate the Information Ratio & Interpret the same ? . Also calculate the annualized Information Ratio. ? Period (Semi Annual) Return of Fund % (Rp) NIFTY Return % (Rb) 1 4.5 5.5 2 3.25 3.75 3 7.25 6.5 4 2.45 2.15 5 -1.05 -1.25 6 -0.35 0.25 7 1.15 -2.5 8 5.45 5.75 9 3.9 4.2 10 4.8 -0.1
A closed-end fund starts the year with a net asset value of $31. By year-end, NAV equals $33.00. At the beginning of the year, the fund is selling at a 3% premium to NAV. By the end of the year, the fund is selling at a 8% discount to NAV. The fund paid year-end distributions of income and capital gains of $3.40. Required: a. What is the rate of return to an investor in the fund during the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year? (Round your answer to 2 decimal places.)
A closed-end fund starts the year with a net asset value of $12. By year-end, NAV equals $12.10. At the beginning of the year, the fund is selling at a 2% premium to NAV. By the end of the year, the fund is selling at a 7% discount to NAV. The fund paid year-end distributions of income and capital gains of $1.50. Required: a. What is the rate of return to an investor in the fund during the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return % b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year? (Round your answer to 2 decimal places.) Rate of return %
What is the equivalent average annual effective rate of interest over 5-year period if the fund earns d^{(4)} = 4% for the initial 1 year, d^{(12)} = 6% for the next 2 years, and i^{(6)} = 9% in the last 2 years?
Assume that the fund is liquidated at the end of the fourth quarter, what are the arithmetic, time-weighted (geometric), and dollar-weighted average rates of return? 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Assets Under Managment at start of quarter ($ milion) 10 12.5 21.25 9 Holding-period return (%) 15% 30% -20% 25% Total assets before net inflows 11.5 16.25 17 11.25 Net inflow ($ million) 1 5 -8 6 Assets under managment at end of quarter ($ million) 12.5 21.25 9 17.25
A closed-end fund starts the year with a net asset value of $12.00. By year-end, NAV equals $12.10. At the beginning of the year, the fund was selling at a 2% premium to NAV. By the end of the year, the fund is selling at a 7% discount to NAV. The fund paid year-end distributions of income and capital gains of $1.50.a. What is the rate of return to an investor in the fund during the year?b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year?
A closed-end fund starts the year with a net asset value of $12.00. By year-end, NAV equals $12.70. At the beginning of the year, the fund was selling at a 4% premium to NAV. By the end of the year, the fund is selling at a 4% discount from NAV. The fund paid year-end distributions of income and capital gains of $1.30. a. What is the rate of return to an investor in the fund during the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A fund begins with $10 million and reports the following three-month results (with negative figures in parentheses): Month: 2 3 Net cashflows (end of month, $ million). -10 -3.0 -5 18.486 HPR (%) 2.0 8.0 (4.0) Compute the arithmetic, time-weighted, and dollar-weighted average returns.
Sinking FundPayment PaymentFrequency TimePeriod (years) NominalRate (%) InterestCompounded Future Value(Objective) $ every 3 months 3 6.0 quarterly $9,000
Create a complete sinking fund schedule and calculate the total payments and interest earned needed for a fund of $9,000 one year from now. The fund will receive deposits made at the end of every three months and earns 5% compounded quarterly. Payment Number 1 2 3 4 Total Payment Amout at End ($) (PMT) Number Number Number Number Total PMT = Number Interest Earned or Accrued ($) (INT) Number Number Number Number Total INT Number Principal Balance Accumulated at End of Payment Interval ($) (BAL) Number Number Number Number
A. Joe is the fund manager. His fund begins with $10 million and has the following monthly returns: Month Net inflows ($ million) HPR (%) Compute the arithmetic average monthly return 1 3 2 4% per month 2% per month 3% per month 1% per month 2 5 8 3 0 (4)

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