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**CFA Practice Question**

A portfolio starts the first quarter with a beginning value of $100 million. It then has the following inflows/outflows, and ending values (all $ millions). Note that ending value for a quarter is the beginning value for the subsequent quarter.

1 | 0 | 109.8

2 | 2.5 | 110.3

3 | 5.7 | 102.3

4 | 5 | 107.2

Quarter | Inflow at Beginning of Period | Ending Value

1 | 0 | 109.8

2 | 2.5 | 110.3

3 | 5.7 | 102.3

4 | 5 | 107.2

What is the money-weighted return?

A. 1.1799%

B. 1.3199%

C. 1.2499%

**Explanation:**Money-weighted return is the IRR. You have to use your calculator, input the cash flows and find the IRR.

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**User Contributed Comments**
8

User |
Comment |
---|---|

dipu617 |
How to put this into Texas Instrument BAII Plus? |

moneyguy |
Geeeez, Analyst Notes! You guys could still provide us with detailed explanations, such as BAii input instructions. |

jjhigdon |
I feel like I do (or should) know how to do this but am also confused. I entered -100 as CF0 (initial investment). Cash inflows in entered as negative (since I presume cash inflows means additional investments) and since each on is made at the beginning, inflow at period 2 is CF1, inflow period 3 is CF2, and so forth. Finally, 107.2 is positive at CF4. I get -1.44%. This makes intuitive sense to me since as I understand it, you make a 100m initial investment, invest another 13.2 over the course of the 4 years and end with 107.2m (less than the total 113.2 invested). What am I missing? |

michaeloa3 |
Anyone figure out how they got the answwer? I can't figure this one out. |

michaeloa3 |
Text says $100M at start of quarter, then table says the inflow is $0??? |

charliedba |
@michaeloa3: they had 100 at the beginning, but the inflow was 0 for that period, thus 0. |

GBolt93 |
Don't see any way that the return is 1.3199% |

sakshishah |
Analyst Notes, please provide detailed explanation for this question. |