Chapter 16

Question 1

The money-weighted rate of return (MWRR)

Answer 1

Useful
Absolute
Assumptions
Achieved

Question 2

Uses of performance measurement

Answer 2

To improve future performance
Comparison of rate achieved against target rate
Comparison against the performance of other portfolios, an index and/or benchmark portfolio
To appraise and remunerate investment managers

Question 3

Limitations of performance measurement

Answer 3

(DRIPTC)
Differing fund objectives
Risk
Impact on fund manager behavior
Projection of past results
Time scale
Costs