EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 24, Problem 11CP
Summary Introduction
To calculate: Time-weighted and dollar-weighted return rates.
Introduction: The weighted return is as the internal return. The
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1. A pension fund portfolio begins with $500,000 and earns 15% the first year and 10% the second
year. At the beginning of the second year, the sponsor contributes another $500,000. What were
the time-weighted and dollar-weighted rates 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?
A pension fund is expected to produce a cash flow of $1,000 at the end of the upcoming year. This cash flow will grow at a rate of 10% for five years and then at the rate of 7% indefinitely. Assume the annual interest rate for pension-related investments is 12%.
1) What is the value of the pension fund?
Chapter 24 Solutions
EBK INVESTMENTS
Ch. 24 - Prob. 1PSCh. 24 - Prob. 2PSCh. 24 - Prob. 3PSCh. 24 - Prob. 4PSCh. 24 - Prob. 5PSCh. 24 - Prob. 6PSCh. 24 - Prob. 7PSCh. 24 - Prob. 8PSCh. 24 - Prob. 9PSCh. 24 - Prob. 10PS
Ch. 24 - Prob. 11PSCh. 24 - Prob. 12PSCh. 24 - Prob. 13PSCh. 24 - Prob. 14PSCh. 24 - Prob. 15PSCh. 24 - Prob. 16PSCh. 24 - Prob. 17PSCh. 24 - Prob. 18PSCh. 24 - Prob. 19PSCh. 24 - Prob. 20PSCh. 24 - Prob. 21PSCh. 24 - Prob. 22PSCh. 24 - Prob. 1CPCh. 24 - Prob. 2CPCh. 24 - Prob. 3CPCh. 24 - Prob. 4CPCh. 24 - Prob. 5CPCh. 24 - Prob. 6CPCh. 24 - Prob. 7CPCh. 24 - Prob. 8CPCh. 24 - Prob. 9CPCh. 24 - Prob. 10CPCh. 24 - Prob. 11CPCh. 24 - Prob. 12CPCh. 24 - Prob. 13CPCh. 24 - Prob. 14CP
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