An investor opened an account by purchasing 1000 shares of stock at $42 per share. One year later these shares were trading at $55/share and the investor purchased 1000 more shares. At the end of the second year, the shares were trading at $54. Calculate the time-weighted and Money weighted rates of return. Time Weighted Money Weighted A) 13.4% 7.73% B) 16.4% 5.26% C) 16.4% 7.73% D) 13.4% 5.26% The correct answer is A. I cannot figure out how to calculate that money rate of return. I feel stupid. I hate the quant section!
time weighted: sqrt[55/42*54/55]=13.4 money weighted cf0=-42000 cf1=-55000 cf2=108000 calculate irr… (dont have my calculator right now)
Highimtom, with all respect, it is a plug-and-chug question. just follow the definition.