Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
10th Edition
ISBN: 9780077835422
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 5, Problem 7PS
Summary Introduction

(A)

To calculate:

Arithmetic and Geometric average time weighted average return for the investor

Introduction:

Arithmetic average return refers to the return ascertained on the investment. It can be computed by adding returns ascertained for the sub periods and dividing the same by total number of periods. Geometric average return which is also known as Geometric mean return is used primarily for the investment that is required to be compounded.

Summary Introduction

(B)

To calculate:

Dollar weighted rate of return

Introduction

Dollar weighted rate of return refers to the method through which portfolio return can be calculated that takes into consideration total dollar values at end and beginning of the investment including capital gains or losses as well as any withdrawals or additions of funds.

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Chapter 5 Solutions

Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)

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