Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Billy invests $ 2 million in mutual fund. At the end of the next 3 years, Billy invest additional amounts in that same mutual fund.

Billy invests $2 million in mutual fund. At the end of the next 3 years, Billy invest additional amounts in that same mutual fund. The annual returns to the fundare -5% for the first year, -1% for the second year, +6% for the third year, and +9% for the fourth year. Which one of the following responses is correct?
a. The time-weighted geometric average annual return is 2.099%, which is less than dollar-weighted-average annual return
b. The time-weighted geometric average annual return is 2.250%, which is less than dollar-weighted-average annual return
c. The time-weighted geometric average annual return is 8.665%, which is greater than dollar-weighted-average annual return
d. The time-weighted geometric average annual return is 2.250%, which is greater than dollar-weighted-average annual return
e. The time-weighted geometric average annual return is 8.665%, which is equal to the dollar-weighted-average annual return
f. The time-weighted geometric average annual return is 2.099%, which is equal to the dollar-weighted-average annual return
g. The time-weighted geometric average annual return is 2.250%, which is equal to the dollar-weighted-average annual return
h. The time-weighted geometric average annual return is 2.099%, which is greater than dollar-weighted-average annual return
i. The time-weighted geometric average annual return is 8.665%, which is less than dollar-weighted-average annual return
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance Fundamentals For Nonprofits

Authors: Woods Bowman

1st Edition

1118004515, 9781118004517

More Books

Students also viewed these Finance questions

Question

=+24. Friday the 13th, accidents. The researchers in Exercise

Answered: 1 week ago