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Sam is a fund manager competing for customers with Arya and Gilly whose investment experience was as follows: Gilly Event Ary

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Answer #1

Time weighted rate of return (TWR) for Arya = (1 + HP1) * (1 + HP2) -1      

HP1 = (2080- 0 -2000) / (0+2000) = 0.04

HP2 = (4235 - 2080 - 2000) / (2080+2000) = 0.038

TWR for Arya = 1.04 * 1.038 - 1 = 0.07952 = 7.95%

Time weighted rate of return (TWR) for Gilly = (1 + HP1) * (1 + HP2) * (1 + HP3) * (1 + HP4) -1   

HP1 = (1020- 0 -1000) / (0+1000) = 0.02

HP2 = (2060 - 1020 - 1000) / (1020+1000) = 0.0198

HP3 = (3120- 2060 -1000) / (2060+1000) = 0.0196

HP4 = (4195- 3120 -1000) / (3120+1000) = 0.0182

TWR for Gilly = 1.02 * 1.0198 * 1.0196 * 1.0182 - 1 = 0.07989 = 7.99%

TWR of Sam = 4%

Thus the answer would be D. S < A < G

For any clarification, please comment. Kindly Up Vote

  

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