A Portfolio Manager Has the Following Sequence of Cash Flows

question 9

Multiple Choice

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

Interarrival Time

The time interval between the arrivals of successive entities, such as customers or data packets, in a system.

Service Time

The amount of time taken to complete a task or service for a customer, often a crucial factor in service and production environments.

Monte Carlo Simulation

A mathematical technique used to estimate the possible outcomes of an uncertain event by simulating the process with random variables numerous times.

Cumulative Probability

The probability that a random variable takes on a value less than or equal to a specified value, often visualized in the form of a cumulative distribution function.