Question
You manage an investment portfolio. On August 1, 2018, a new client invested $50,000 into your portfolio. Three months (i.e., 1/4 of one year) later
You manage an investment portfolio.
On August 1, 2018, a new client invested $50,000 into your portfolio. Three months (i.e., 1/4 of one
year) later the client withdrew $10,000 and the account balance immediately following this
withdrawal was $41,000. Six months (i.e., 1/2 of one year) after the withdrawal you issued a
$1,500 dividend to the client and, at the client's instruction, the dividend was immediately
reinvested in the portfolio. There was no other activity in the account and on August 1,
2019 the balance in the account was $43,050.
Part 1) Write an equation that would solve for the dollarweighted return. Please make sure
your equation is easy to read (including any exponents).
Part 2) What is the annualized timeweighted return (i.e., geometric return or CAGR)? Please
show your work.
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