if we made 6.95% return on investment in the first 24 days of the month. and 1.62% in the last 7 days of the month what is our weighted average return on investment for that month. Please give a formula for your calculation if possible
2006-10-03 11:34:00 · 3 answers · asked by kippur777 1 in Business & Finance ➔ Investing
The answer of JP is not entirely correct. You have to consider the compounding effect from your yield. Based from your data, you have to assume that the compounding happens every week. The following formula answers your question:
(1+(6.95%/4))^4= 1.071 -1 = 7.1%
(1+(1.62%/4))^4 = 1.0163 - 1 = 1.63%
Weight it according to the time horizon of the investment:
(7.1 x (3/4))+(1.63 x (1/4) = 5.7325%
2006-10-03 17:27:16 · answer #1 · answered by J 4 · 0⤊ 0⤋
(6.95*24/31) + (1.62*7/31) = 5.75
2006-10-03 12:46:57 · answer #2 · answered by JB 1 · 0⤊ 0⤋
I believe JB has the correct answer, and the methodology is also correct.
2006-10-03 14:39:12 · answer #3 · answered by Carlos R 5 · 0⤊ 1⤋