Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This is Actuarial Science: Dollar-weighted and Time-weighted rate of returns For an investment account, you are given the following information during the first 6 months

This is Actuarial Science: Dollar-weighted and Time-weighted rate of returns

For an investment account, you are given the following information during the first 6 months of the year.

Date Fund Value Before Activity Deposit
January 1 60
March 15 75 30
May 1 65 25
June 30 121

a) Use the time-weighted method to calculate the yield rate earned by this investment during the first 6 months. j= % b) Use your answer to part a) to compute the equivalent annual effective interest rate earned by this investment. i= %

You are given the following information about the activity in 2 different investment accounts: Account A

Date Fund Value Before Activity Deposit Withdrawal
January 1, 2014 400
September 1, 2014 445 X
November1, 2014 425 2X
December 31, 2014 445

Account B

Date Fund Value Before Activity Deposit Withdrawal
January 1, 2014 400
April 1, 2014 445 X
December 31, 2014 415.5

During 2014, the dollar-weighted return for investment account A equals the time-weighted return for investment account B, which is equal to i. Compute i %

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

Peace Love Auditing Journal

Authors: Epic Love Books

1st Edition

1697161693, 978-1697161694

More Books

Students also viewed these Accounting questions

Question

What is meant by saying that debt provides a tax shield?

Answered: 1 week ago

Question

What is the meaning and definition of E-Business?

Answered: 1 week ago