The dollar-weighted return method involves finding the portfolio's
A) payback period.
B) net present value.
C) mean value.
D) internal rate of return.

Question

Quizplus · Accepted Answer

The dollar-weighted return method is used to calculate the internal rate of return (IRR) of a portfolio. It takes into account the timing and amount of cash flows, which makes it a better method than the simple average return (i.e., mean value). It is not used to find the payback period or net present value.

The Dollar-Weighted Return Method Involves Finding the Portfolio's