Quantitative Methods Q76

0. Mariah 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?

Answer
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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%

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