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1. Major Return Measures

a. calculate and interpret major return measures and describe their appropriate uses;

What is the formula for Holding Period Return? \(R_t = \frac{P_t - P_{t - 1} + D_t}{P_{t-1}}\)

What is the formula for Mean Return? \(\mu = \frac{\sum X_i}{N}\)

What is the formula for Geometric Mean Return? \(G = \sqrt[n]{X_1 X_2 X_3 ... X_n}\)

What is the dollar weighted rate of return? The dollar-weighted rate of return is essentially the internal rate of return (IRR) on a portfolio.

What is time-weighted rate of return? The time-weighted rate of return measures the compound growth rate of $1 initial investment over the measurement period.

What is the formula for return on a portfolio of assets? \(E(R_p) = \sum\limits_{i} \omega_i E(R_i)\) - R_p = Return on the portfolio - R_i = Return on asset i - \omega_i = Weighting (share) of asset i