On 1st April 2017 an investment fund had a value of £3 million. Further net cash flows of £200,000 and £300,000 were received on 1st October 2018 and on 1st April 2019. The fund had a value of £3.4 million on 30th September 2018 and a value of £3.7 million on 31st March 2019. The value of the fund on 31st March 2020 was £4 million. For the period 1st April 2017 to 31st March 2020, calculate the following to the nearest 0.1%: The annual effective time-weighted rate of return earned on the fund. (i) The annual effective money-weighted rate of return earned on the fund. (iii) Explain, with reasons, which of the two methods for calculating the rate of return, referred to in parts (i) and (ii) above, is most appropriate for assessing the performance of the investment manager overseeing the fund during the given period of time. (ii)

On 1st April 2017 an investment fund had a value of £3 million. Further net cash flows of £200,000 and £300,000 were received on 1st October 2018 and on 1st April 2019. The fund had a value of £3.4 million on 30th September 2018 and a value of £3.7 million on 31st March 2019. The value of the fund on 31st March 2020 was £4 million. For the period 1st April 2017 to 31st March 2020, calculate the following to the nearest 0.1%: The annual effective time-weighted rate of return earned on the fund. (i) The annual effective money-weighted rate of return earned on the fund. (iii) Explain, with reasons, which of the two methods for calculating the rate of return, referred to in parts (i) and (ii) above, is most appropriate for assessing the performance of the investment manager overseeing the fund during the given period of time. (ii)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 10RE: If 90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of 23,138.32...

See similar textbooks

Similar questions

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 )
An investment manager had a fund with a value of 100,000 on December 31, 2017. On June 30, 2018 that fund had dropped in value to 90,000 and a new deposit of 110,000 was received. On December 31, 2018 the account balance was 220,000. Find the time-weighted rate of return for 2018 Find the exact (to five decimal points) dollar-weighted rate of return for 2018
On Sept 1, 2010, a fund had $180,000. On Feb 1, 2011, the fund balance was $175,000 and a withdrawal of $15,000 was made. On July 1, 2011, the fund balance was $160,000 and a new deposit of $5,000 was made. On Aug 31, 2011, the fund balance was $180,000. The time weighted rate of return is T and the dollar weighted return is D. Find T.
Dynabase Tool has forecast its total funds requirements for the coming year as shown in the following table. Month Amount January $2,000,000 February 2,000,000 March 2,000,000 April 4,000,000 May 6,000,000 June 9,000,000 July 12,000,000 August 14,000,000 September 9,000,000 October 5,000,000 November 4,000,000 December 3,000,000 a. Divide the firm’s monthly funds requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components. b. Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. Assume that, under the aggressive strategy, long term funds finance permanent needs and…
Dynabase Tool has forecast its total funds requirements for the coming year as shown in the following table. Month Amount January $2,000,000 February 2,000,000 March 2,000,000 April 4,000,000 May 6,000,000 June 9,000,000 July 12,000,000 August 14,000,000 September 9,000,000 October 5,000,000 November 4,000,000 December 3,000,000 a. Divide the firm’s monthly funds requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components. b. Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. Assume that, under the aggressive strategy, long term funds finance permanent needs and…
An investor places $10,000 into a fund on Jan 1, 2024. On Jan 1, 2025 the fund hasrisen to $12,000 and the investor removes $1,000. On Jan 1, 2026 the fund has fallen to$7,000 and the investor removes $1,000. On Jan 1, 2027 the fund has risen to $10,000and the investor puts in $1,000. On Jan 1, 2028 the value of the fund is $14,000.a) Calculate the Time-Weighted Rate of Return for this fund as an annual effectiverate.b) Calculate the Dollar-Weighted Rate of Return for this fund as an annual effectiverate.c) Explain why the values in a) and b) are different.
The New Fund had average daily assets of $3.2 billion in the past year. The fund sold $500 million and purchased $500 million worth of stock during the year. a. What was its turnover ratio? b. If the fund had an expense ratio of 1.1%, what were the total fees paid to the fund's investment managers?
For the same two funds discussed in Q2 the ending wealth after five years was $1.2438 per dollar invested at the beginning for the Equity Income Fund, and $1.0492 per dollar invested at the beginning for Personal Strategy Fund. What were the annual average total returns for each fund for this five-year period?
You need to know the profitability of an investment fund where the amount to invest is $ 17,000, the amount of initial participation value is 3.1235 and at the end of the period is 4.456, what is the profitability of the fund?
Consider an investment fund that starts out with £190,000. After one year, the value of the fund is £203,000. The investor deposits an additional £11,000 to the fund. After a second year, the value of the fund is £207,000. The investor withdraws £41,000. After a third year, the value of the investment fund is worth £177,000. Compute the money-weighted rate of return Enter a percentage correct to 1 decimal place Compute the time-weighted rate of return Enter a percentage correct to 1 decimal place
If $13,000 had been invested in a certain investment fund on September 30, 2008, it would have been worth $59,102.69 on September 30, 2018. What interest rate, compounded annually, did this investment earn? (Round your answer to two decimal places.)
The New Fund had average daily assets of Php2.2 billion in the past year. The fund sold Php400 million and purchased Php500 million worth of stock during the year. What was its turnover ratio?