Once again, use Bob's situation, but this time solve for the time-weighted return
For this example, the following is used: a risk-free rate of 6%, the portfolio's time-weighted return
Manager performance standards promulgated by the Association of Investment Management Research require that stock, bond, and real estate investment managers use time-weighted returns
for reporting investment performance.
Exhibit 4: Time-Weighted Return
for Barry and Samantha Barry Year 1 ($150-$100)/ $100=50% Year 2 ($350-$150-$100)/($150+$100)= 40% Year 3 ($270-$350-$100)/($350+$100)= (40%) Time-weighted return
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