CFA Practice Question

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.

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.

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.
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