- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 1. Rates and Returns
- Subject 3. Money-Weighted and Time-Weighted Return
CFA Practice Question
On January 7, 2013, an investor purchases 100 shares of stock for $32.50 a share. On 7 January 2014, the investor purchases 100 more shares of the same stock for $36.70 a share. On 7 January 2015, the investor sells all 200 shares of the stock for $42.00 a share. The internal rate of return for this investment is best described as an example of a ______.
B. time-weighted rate of return
C. money-weighted rate of return
A. geometric mean return
B. time-weighted rate of return
C. money-weighted rate of return
Correct Answer: C
The money-weighted return is the internal rate of return for the portfolio.
User Contributed Comments 3
| User | Comment |
|---|---|
| Yrazzaq88 | Dollar-weighted = CPT IRR function (Inserting through CF first) |
| msk500 | You are not required to do computations here--just know that IRR = Money/dollar-weighted return. |
| andyansong | by definition calculating the money weighted rate of return is just like making the irr the subject and solving for the irr in the equation.irr is an example of mwr |