Quantitative Methods Q76
76Mariah Hill buys one share of a stock for $50 on January 1, 2011. She buys an additional share on January 1, 2012 at $60. The stock paid a dividend of $3 per share at the end of each year. On January 1, 2013, she receives $150 for selling the two shares.
| Option | Time weighted return | Money weighted return |
| A | 28.60% | 27.98% |
| B | 27.98% | 28.60% |
| C | 26.80% | 29.78% |
Which of the following options most likely represent the time weighted and money weighted returns?
- Option : B
- Explanation : Using a financial calculator, compute IRR. CF0 = - 50, CF1 = - 57, CF2 = 156, CPT IRR = 28.60% The money weighted return is equal to 28.60%
