Time-Weighted Method-GPRS System Technical Lecture
Time-Weighted Method Principle
At time 0, 1, 2...m-1, m, the following data is tracked:
- Investment Amounts (C1, C2, C3...Cm-1, Cm)
- Balances (B0, B1, B2...Bm-1, Bm)
- Rates of Return (j1, j2, j3...jm-1, jm)
The time-weighted method evaluates the performance by considering the changes in balances relative to the investment amounts over time, ignoring the impact of the timing of cash flows.
This approach provides a clearer picture of an investment's performance over a period, isolating it from external cash flows that may distort simple returns calculations.
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