Question

The performance of an investment fund is to be evaluated over a two year period starting from 1st January 2011. The given fund had a value of £ 7.31 mil on the 1st January 2011 that had increased to £11.35 mil by the 1st January 2013. During this period, the fund had received a net cash flow of £529,000 on the 1st January 2012 that was followed by a further net cash flow of £ 707,000 on the 1st July 2012. It is estimated that immediately before the receipt of these net cash flows the fund had a value of £8.2 mil and £ 10.41 mil, respectively. For the given 2-year valuation period estimate, to the nearest 0.1%, the following: a) The annual effective time-weighted rate of return earned on the fund; ; [1] b) The annual effective money-weighted rate of return earned on the fund; ; [2] c) The linked internal rate of return using sub- intervals of a calendar year. ; [2]

          The performance of an investment fund is to be
evaluated over a two year period starting from
1st January 2011. The given fund had a value of £
7.31 mil on the 1st January 2011 that had
increased to £11.35 mil by the 1st January 2013.
During this period, the fund had received a net
cash flow of £529,000 on the 1st January 2012
that was followed by a further net cash flow of £
707,000 on the 1st July 2012. It is estimated that
immediately before the receipt of these net cash
flows the fund had a value of £8.2 mil and £
10.41 mil, respectively.
For the given 2-year valuation period estimate,
to the nearest 0.1%, the following:
a) The annual effective time-weighted rate of
return earned on the fund;
; [1]
b) The annual effective money-weighted rate
of return earned on the fund;
; [2]
c) The linked internal rate of return using sub-
intervals of a calendar year.
; [2]

The performance of an investment fund is to be
evaluated over a two year period starting from
1st January 2011. The given fund had a value of £
7.31 mil on the 1st January 2011 that had
increased to £11.35 mil by the 1st January 2013.
During this period, the fund had received a net
cash flow of £529,000 on the 1st January 2012
that was followed by a further net cash flow of £
707,000 on the 1st July 2012. It is estimated that
immediately before the receipt of these net cash
flows the fund had a value of £8.2 mil and £
10.41 mil, respectively.
For the given 2-year valuation period estimate,
to the nearest 0.1%, the following:
a) The annual effective time-weighted rate of
return earned on the fund;
; [1]
b) The annual effective money-weighted rate
of return earned on the fund;
; [2]
c) The linked internal rate of return using sub-
intervals of a calendar year.
; [2]

Added by Laura C.

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