# Quantitative Methods - Quantitative Methods Section 1

>>>>>>>>Quantitative Methods Section 1

• A

11.85%.  • B

33.80%.  • C

35.89%.  • Option : A
• Explanation : Calculate the outflows and inflows on every significant date:Outflows: On January 1, 2011: 120 shares * \$75 per share = \$9000 Inflows: On January 1, 2012: Dividend on 120 shares: 120 * \$5 per share=\$600 Sale of 60 shares: 60 * \$80 per share = \$4800, Total = \$5400 On January 1, 2013 Dividend on remaining 60 shares: 60 * \$5 per share = \$300 Sale of 60 shares: 60 * \$82 per share = \$4920 Total = \$5220 IRR is the money weighted return which can be calculated using the cash flows: CF0 = -9000, CF1 = 5400, CF2 = 5220, CPT IRR = 11.85% The money weighted return is equal to 11.85%.

• A

11.34%.  • B

14.18%.  • C

14.94%.  • Option : C
• Explanation : Calculate the outflows and inflows at t = 0, t = 1 and t = 2. Using a financial calculator, calculate the IRR. CF0 = - 85, CF1 = -85, CF2 = 210, CPT IRR = 14.94%.

• A

11.34%.  • B

14.18%.  • C

14.94%.  Amounts in \$ Quarter 1 Quarter 2 Quarter 3 Quarter 4 Beginningbalance 2,000,000 3,100,000 3,800,000 4,500,000 Beginningperiodicinflow/(outflow) 500,000 450,000 200,000 (350,000) Amount invested 2,500,000 3,550,000 4,000,000 4,150,000 Ending balance 3,100,000 3,800,000 4,500,000 4,000,000

Which of the following is most likely the annualized time weighted return of
the portfolio?

• A

43.93%.  • B

8.47%.  • C

9.50%.  • Option : B
• Explanation : The time weighted rate of return is not the internal rate of return. Statements A and C are correct.