Hi All

I understand how to derive the HPRs on a time weighted question, and my understanding was you needed to get the geometric mean of these figures (or so I have been doing so far correctly).

Until I saw the below question…

On January 1, Jonathan Wood invests $50,000. At the end of March, his investment is worth $51,000. On April 1, Wood deposits $10,000 into his account, and by the end of June, his account is worth $60,000. Wood withdraws $30,000 on July 1 and makes no additional deposits or withdrawals the rest of the year. By the end of the year, his account is worth $33,000. The time-weighted return for the year is closest to:

A) 7.0%. B) 10.4%. C) 5.5%. -------------------------------------------------------------------------------- B January – March return = 51,000 / 50,000 − 1 = 2.00% April – June return = 60,000 / (51,000 + 10,000) − 1 = –1.64% July – December return = 33,000 / (60,000 − 30,000) − 1 = 10.00% Time-weighted return = **[(1 + 0.02)(1 − 0.0164)(1 + 0.10)]** − 1 = 0.1036 or 10.36%

Wouldn’t you do the highlighted to the power of 1/3 and then -1?

Thanks

P