7. Ginger Beaumont began the year with a portfolio valued at $10,000 and made a contribution to and a withdrawal from this portfolio over the next three months. Information regarding amounts and dates of these cash flows and the portfolio's market value at various dates is shown below.

a. Calculate the dollar-weighted return for the three-month period. (Hint: Unless you have a suitable calculator, you will have to use trial and error to find the doll ar-weighted return. To begin, the monthly dollar-weighted return is less than 10%.)

b. Calculate the time-weighted return for the three-month period.

c. Why is the time-weighted return for the quarter less than the dollar-weighted return in this particular problem?

Transcribed Image Text:

Date 12/31 1/31 Contribution (-) or Withdrawal (+) $0 +956 Portfollo Value $10,000 9,000 2/28 -659 12,000 8/31 0 13,000