This approach is not affected by the timing of cash flows; therefore, it is the preferred method of performance measurement.
Which aproach are we talking about?
Answer
Time weighted rate of return
Tags
#reading-7-discounted-cashflows-applications
Question
This approach is not affected by the timing of cash flows; therefore, it is the preferred method of performance measurement.
Which aproach are we talking about?
Answer
?
Tags
#reading-7-discounted-cashflows-applications
Question
This approach is not affected by the timing of cash flows; therefore, it is the preferred method of performance measurement.
Which aproach are we talking about?
Answer
Time weighted rate of return
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Subject 3. Dollar-weighted and Time-weighted Rates of Return eighted rate of return will be inflated (depressed).
The time-weighted rate of return measures the compound growth rate of $1 initial investment over the measurement period. Time-weightedmeans that returns are averaged over time. <span>This approach is not affected by the timing of cash flows; therefore, it is the preferred method of performance measurement.
Example
Jayson bought a share of IBM stock for $100 on December 31, 2000. On December 31, 2001, he bought another share for $150. On December 31, 2002, he sold
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