CONNECT WITH LEARNSMART FOR BODIE: ESSE
11th Edition
ISBN: 2819440196246
Author: Bodie
Publisher: MCG
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Chapter 18, Problem 1PS
Summary Introduction
To calculate:
The dollar-weighted average return on monthly basis for a household saving account.
Introduction:
Dollar- weighted average return means
Expert Solution & Answer
Answer to Problem 1PS
Cash flows either positive or negative or vice versa is divided by the total of of investment,through this dollar weighted average return for a particular period can be calcualted.
Explanation of Solution
Given Information:
The saving-account of a household and entries are on the first day of each month:
| Month | Additions | Withdrawls | Value |
| January | |||
| February | |
||
| March | |
||
| April | |
||
| May | |
||
| June | |
||
| July | |
||
| August | |
Household monthly Dollar Weighted Average Return can be calculated easily with the help of MS Office − Excel with the help of formulas. The calculations are shown under the snip of excel as attached below for reference:
The value of portfolio is calculated on monthly basis post taking the effects of with drawls and additions. The period of addition and with drawl in months is then converted into days to compute the weighted period and then the weighted average return is calculated.
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Chapter 18 Solutions
CONNECT WITH LEARNSMART FOR BODIE: ESSE
Ch. 18.1 - Prob. 1EQCh. 18.1 - Which fund would you choose if you were...Ch. 18.6 - Prob. 1EQCh. 18.6 - What would happen to the contribution of security...Ch. 18 - Prob. 1PSCh. 18 - Is it possible for a positive alpha to be...Ch. 18 - Prob. 3PSCh. 18 - Prob. 5PSCh. 18 - 6. stock price and dividend history are as...Ch. 18 - Prob. 7PS
Ch. 18 - Based on current dividend yields and expected...Ch. 18 - Consider the two (excess return) index~m0del...Ch. 18 - Prob. 10PSCh. 18 - Prob. 11PSCh. 18 - Prob. 12PSCh. 18 - Conventional wisdom says that one should measure a...Ch. 18 - Prob. 14PSCh. 18 - Prob. 15PSCh. 18 - Bill Smith is evaluating the performance of four...Ch. 18 - Prob. 17PSCh. 18 - Prob. 18PSCh. 18 - Prob. 19PSCh. 18 - Prob. 20PSCh. 18 - Prob. 21PSCh. 18 - Prob. 22PSCh. 18 - Prob. 1CPCh. 18 - Prob. 2CPCh. 18 - Prob. 3CPCh. 18 - Prob. 4CPCh. 18 - What is the Sharpe performance measure for...Ch. 18 - Prob. 6CPCh. 18 - Prob. 7CPCh. 18 - Prob. 8CPCh. 18 - Prob. 9CPCh. 18 - Prob. 10CPCh. 18 - Prob. 11CPCh. 18 - Prob. 12CPCh. 18 - Prob. 13CPCh. 18 - Prob. 14CPCh. 18 - Prob. 1WMCh. 18 - Prob. 2WMCh. 18 - Prob. 3WMCh. 18 - Prob. 4WMCh. 18 - Prob. 5WMCh. 18 - Prob. 7WM
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