A Portfolio Manager Has the Following Sequence of Cash Flows

question 34

Multiple Choice

A portfolio manager has the following sequence of cash flows over a two year period: $$\begin{array} { c c c c } \text { Time } & \begin{array} { c } \text { Market Value } \\\text { before cash flow }\end{array} & \text { Cash In } & \begin{array} { c } \text { Market Value } \\\text { after cash flow }\end{array} \\\hline 0 & \$ + 0 & \$ 3,000 & \$ 3,000 \\1 & \$ 3,200 & \$ 1,950 & \$ 5,150 \\2 & \$ 6,000 & - \$ 90 & \$ 5,910\end{array}$$ Calculate the portfolio manager's time weighted return.

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

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Definitions:

Average Inventory

An accounting measure that calculates the average value of inventory over a certain period of time to help assess inventory levels.

Buying Habits

Patterns or tendencies consumers exhibit when purchasing goods or services, including frequency, timing, and preference.

Direct Disposal Costs

Costs directly associated with the disposal of a fixed asset, including costs to remove, dismantle, and transport the asset.

Lower of Cost

A valuation rule often used in inventory accounting to record the cost of inventory at the lower of its original cost or its current market value.