Winter Asset Management manages institutional and individual accounts, including the account of the Mientkiewicz family. This...
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Winter Asset Management manages institutional and individual accounts, including the account of the Mientkiewicz family. This account was initially valued at $1 M. One month later it was worth $1.08 M. (a) Assuming no external cash flows and the reinvestment of all income, what is the return for the month? (b) If the account received a $50,000 contribution at the beginning of the month (which would be added to the original $1 M), but the final value is still $1.08 M, what is the return? (c) Repeat part (b), but assume the $50,000 is contributed at the end of the month. (d) Assume that the account received a contribution of $30,000 on day 5 and a contribution of $20,000 on day 16. The daily pricing system on the account tells us that the values on these dates (including the contributions) were $1,045,000 on day 5 and $1,060,000 on day 16. Find the 3 subperiod returns for the month. (e) Given the cash flows in part (d), find the account's time-weighted return. (f) Given the cash flows in part (d), find the account's money-weighted return. Winter Asset Management manages institutional and individual accounts, including the account of the Mientkiewicz family. This account was initially valued at $1 M. One month later it was worth $1.08 M. (a) Assuming no external cash flows and the reinvestment of all income, what is the return for the month? (b) If the account received a $50,000 contribution at the beginning of the month (which would be added to the original $1 M), but the final value is still $1.08 M, what is the return? (c) Repeat part (b), but assume the $50,000 is contributed at the end of the month. (d) Assume that the account received a contribution of $30,000 on day 5 and a contribution of $20,000 on day 16. The daily pricing system on the account tells us that the values on these dates (including the contributions) were $1,045,000 on day 5 and $1,060,000 on day 16. Find the 3 subperiod returns for the month. (e) Given the cash flows in part (d), find the account's time-weighted return. (f) Given the cash flows in part (d), find the account's money-weighted return.
Expert Answer:
Answer rating: 100% (QA)
a To calculate the return for the month without any external cash flows we can use the formula Return Ending Value Beginning Value Beginning Value In this case Beginning Value 1 M Ending Value 108 M R... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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