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Dollar-Weighted Rate of Return

   Also found in: Acronyms 0.01 sec.
Dollar-weighted rate of return
Also called the internal rate of return; the interest rate that makes the present value of the cash flows from all the subperiods in an evaluation period plus the terminal market value of the portfolio equal to the initial market value of the portfolio.

Dollar-Weighted Rate of Return
The rate of return at which the present value of all cash inflow offsets cash outflows. That is, it is the yield that each dollar in the investment earns. A dollar-weighted rate of return is a measure of the expected growth of an investment; a higher dollar-weighted rate of return is seen as more desirable. It is more commonly called an internal rate of return.


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