Quantitative Methods Q68
0. The table below shows information about a common stock:
| Date | Amount € | |
| Stock purchase (1 share) | 1 July 2012 | 54.00 |
| Stock purchase (1 share) | 1 July 2013 | 49.00 |
| Stock sale (2 shares @ 61.00 per share) | 1 July 2014 | 122.00 |
The stock does not pay a dividend. The money-weighted rate of return on the investment is closest to:
- Option : A
- Explanation : The money-weighted rate of return is the IRR based on the cash flows related to the investment. In this case, a cash outflow of €54 occurs at t = 0, another outflow of €49 occurs at t = 1, and an inflow of €122 occurs at t = 2. Using a financial calculator, the IRR of these cash flows is 11.64%.
