Question

g On June 30, the value of the account is 157.50. On December 31, the value of the account is X. Using the time weighted method, the equivalent annual effective yield during the first 6 months is equal to the (time-weighted) annual effective yield during the entire 1-year period. Calculate X

Answer 1

236.23

Step-by-step explanation:

The computation of X is shown below:-

As per the time-weighted method

The 6-month yield

= (40 ÷ 50) × (80 ÷ 60) × (157.50 ÷ 160) - 1

= 5%

Annual equivalent = (1.05)^2 - 1

= 10.25%

1 - year yield = (40 ÷ 50) × (80 ÷ 60) × (175 ÷ 160) × (X ÷ 250) - 1

= 0.1025

X(0.004667) = 1.1025

X = 236.23

Therefore on December 31st the value of account of X = 236.25