- CFA Exams
- CFA Level I Exam
- Study Session 18. Portfolio Management (1)
- Reading 52. Portfolio Risk and Return: Part I
- Subject 1. Major Return Measures

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**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.

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**User Contributed Comments**
3

User |
Comment |
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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 |