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S2014-Q6

N

Nimisha

Member
Hi
I am unable to calculate the TWRR over the full year which is calculated as 10.61%.
Please tell me the equation which will be used to calculate this.
I did
(1+i)=3600/3600 ×4050/(3600+56) ×4500/(4050+30) ×4200/(4500+187).
Please help
 
Hi Nimisha,
It can be calculated as:
[(3600-56)/3600] x [(4050-30)/3600] x [(4500-187)/4050] x [(4200+52)/4500] - 1
Kind regards
David
 
Hi
part iii of this question. I see that the examiners calculate income on index e.g Q3 by saying =4050*1797/1776*0.039/4=40 I would assume that if one invests in the index, then they own 3600/1500 = 2.4 contracts/units of the index at 31 Dec 2012. in Q3 income would therefore be 1797*0.039/4*2.4 = 42.05 The examiner's solution assumes that for the prior two quarters, the funds are in the fund and only got invested in index at the start of quarter 3. This is not consistent with the examiners calculations in part ii, such "rebalancing" was not done in calculating index return. I take it that if we invest in the index, then we put the 3600 into the index right at the start. We will not make reference to the other fund since we have assumed it is non-existent ie we only have the index fund. I am not sure if my understanding makes sense or I missed something please help
 
Sorry Brian, I'm struggling to see exactly what you are asking here. It sounds as though you understand what the examiners have done and so, given the proximity of the exam and limited time available, I wouldn't worry about this too much, but if you do want me to see whether I can help further please do feel free to post again.

Best wishes
Gresham
 
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