The Role of Conceptual Context in Finding the Rate of Return

$25.00

This article uncovers and explores a fairly subtle issue at a first glance, namely compounding and noncompounding contexts in the problem of finding the rate of return for investment portfolios. In reality this is a very important factor that should be considered as an essential characterstic of any method for calculating rate of return.

Authors: Yuri Shestopaloff and Konstantin Shestopaloff

This article uncovers and explores a fairly subtle issue at a first glance, namely compounding and noncompounding contexts in the problem of finding the rate of return for investment portfolios. In reality this is a very important factor that should be considered as an essential characterstic of any method for calculating rate of return. The IRR equation represents a pure compounding context of the application. The appropriate equation for noncompounding context has been derived. It turned out to be a flavor of the Modified Dietz equation.

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The Journal of Performance Measurement

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