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Why Should the Investment Manager Not Simply Take the Period-Ending

Question 6

Multiple Choice

Why should the investment manager not simply take the period-ending portfolio value,divide it by the previous period-ending portfolio value,and then subtract 1 to determine the realized yield?


A) because this would be confusing to explain to the manager's superiors
B) because these calculations are almost always done by dealers and brokers
C) because funds may have been withdrawn during the period
D) because this always inflates the actual yields and is misleading

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