A Portfolio Manager Has the Following Sequence of Cash Flows

question 7

Multiple Choice

A portfolio manager has the following sequence of cash flows over a two year period: $$\begin{array} { l c c c } \text { Time } & \mathbf { 0 } & \mathbf { 1 } & \mathbf { 2 } \\\hline \text { outflows } & - \$ 2,000 & - \$ 500 & \\\text { inflows } & & \$ 50 & \$ 3,090\end{array}$$ Calculate the portfolio manager's dollar weighted return.

• A)13.56%
• B)11.48%
• C)15.50%
• D)8.75%
• E)10.67%

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Definitions:

Journal Entry

The transaction (debits and credits) that is recorded into the journal once it is analyzed.

Accounts Payable

Liabilities representing amounts owed to creditors for goods and services received but not yet paid for.

Retired

In accounting and finance, this term often indicates that an asset has been taken out of service or that a debt instrument, like a bond, has been paid off and is no longer in circulation.

Bonds Payable

Bonds payable refers to the amount of money a company owes to holders of its bonds, representing a long-term debt obligation.