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September 2007 Question 1

You wouldn't need to calculate this - you could have just said that the money weighted rate of return would have been higher because money had been taken out when the growth rate fell.

In order to calculate the money weighted rate of return, you'd need to calculate the fund value at the end of the year. To do this, you'd need to allow the initial investments to grow at the rates indicated in the table for the first half of the year, and then you'd take half the money out of the fund and let the remaining funds fall at the rates given in the tables for the second half of the year. You'd make some estimate of the timings of the other payments in and out (as the trustee has in the original letter). You'd then set up your MWRR equation and solve for i. Not very nice!
 
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