Additional Problem 52 You are the manager of the Mighty Fine

Additional Problem 5-2 You are the manager of the Mighty Fine mutual fund. The following table reflects the activity of the fund during the last quarter. The fund started the quarter on January 1 with a balance of $120 million. Mighty Fine Mutual Fund Monthly Data (measured at end of month) January February ch -5.3 Net inflows (S million) HPR (96) 5.5 6.20 4.80 a. Calculate the quarterly arithmetic average return on the fund. (Round your answer to 2 decimal places.) Arithmetic average b. Calculate the quarterly geometric (time-weighted) average return on the fund. (Round your answer to 2 decimal places.) Geometric average c. Calculate the quarterly dollar-weighted average return on the fund. (Round your answer to 2 decimal places.) Dollar-weighted average return

Solution

a. (-1.9+6.2+4.80)/3= 3.03%

b. Geometric average =( (1+(-.019))*(1+.062) *(1+0.048))^1/3-1

= 2.97%

b. Dollar weighted average return is ilke IRR for the given cash flows

=-+$5.5/(1+r)+-5.3/(1+r)^2 =0

Thus R= 3.64%