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 On 1 January 2007 the value has decreased to £130,000 and £30,000 is withdrawn.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?

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 On 1 January 2007 the value has decreased to £130,000 and £30,000 is withdrawn.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?

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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The value in pounds of a fund at time t = 0 is V0 = 50, 000. After one year (at t = 1) it has increased to V1 = 51, 500 and at that time £1, 500 is withdrawn. After two years (at t = 2) the fund is worth V2 = 50, 800. (a) Compute the time-weighted rate of return. (b) If the fund is liquidated after two years what is the yield that has been achieved?
B. At time 0, K is deposited into Fund X, which accumulates at a force of interest of t + 3 t² + 6t+9 8₁ At time m, 2K is deposited into Fund Y, which accumulates at an interest of 10.25%, convertible quarterly. At time n, where n > m, the accumulated value of each fund is 3K. Calculate m.
You invest money in a fund that paid 9% simple interest paid annually. If it is worth $21,200.00 in 11 months, a) what is the present value? $ b) What is the rate of return? (answer as a percent 2 decimal places)
2. If $14,000 had been invested in the Fictious Fund on June 30, 1995, then on June 30, 2005 the investment would have been worth $55,177.52. What interest rate compounded annually would this investment have earned? Round to the nearest hundredth of a percent. а. 14.70% b. 39.41% С. 29.41% d. 13.71% е. 29.41% 3. A credit card bill due on April 5 showed a balance of $263. The card holder forgot to pay the bill until the 20th of the month, but paid the full amount of $263 at that time. In the mean time, the card was used to make purchases of $138 on the 10th of the month and $74 on the 20th of the month. What was the average daily balance for the billing period? а. $362.50 b. $95.97 с. $166.07 d. $184.27
An investment fund contains £100,000 at time zero. After six months its value has grown to £105,000 and further £10,000 are added. At the end of the year the fund is worth £125,000. In the first six months of the second year its value grows to £126,000 and at the end of the year it is worth £128,000. At that point £50,000 are withdrawn. At the end of the following six months the fund’s value is £80,000 and the fund is liquidated a)In which semester did the fund have its best performance? (To avoid any confusion we notice that a ‘semester’ is a 6-month period.) b)Compute the time-weighted rate of return per semester.
Calculate the EAR of the following investment, entered as a percentage (Example: if your answer is 0.145, enter 14.5) Year Number Cashflow 0 -11400 1 3500 2 3000 3 3100 4 2800 Your Answer:
Example 26a (Varying Force of Interest) A fund earns interest at a force of interest 8, = kt . A deposit of RM100 at time t=0 will grow to RM250 at the end of 5 years. Determine k.
2. If $14,000 had been invested in the Fictious Fund on June 30, 1995, then on June 30, 2005 the investment would have been worth $55,177.52. What interest rate compounded annually would this investment have earned? Round to the nearest hundredth of a percent.
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 )
Please
An investor pays the following separate amounts into a fund: £11,900 at t=6, £17,600 at t=14, and £10,700 at t=27. The fund pays an effective annual rate of interest of 11.9% during the first 7 years and effective half-yearly rate of discount of 3.5% for the remaining period until the end of year 27. Assuming that no withdrawals are to be made throughout the entire term of this investment, calculate the present value of the fund (i.e. at t=0). (correct answer = 12097.62, asnwer IS NOT £16,538.08, no tables, please, ONLY formulas)
A real estate investment has the following expected cash flows: Year Cash Flows 1 $15,000 2 14,000 3 19,000 4 21,000 The discount rate is 6 percent. What is the investment’s present value? Round your answer to 2 decimal places; for example 2345.25.

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