CFA Practice Question

There are 294 practice questions for this study session.

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 ______.

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
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