Which of the Following Statements About Return Calculation Is Most

question 3

Multiple Choice

Which of the following statements about return calculation is most accurate?

• A) Time-weighted returns are always higher than money-weighted returns.
• B) Money-weighted returns are always higher than time-weighted returns.
• C) The GIPS require that time-weighted returns are reported for most asset classes.
• D) The time-weighted return is equivalent to the IRR.

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Definitions:

International Fisher Effect

A theory proposing that the difference in nominal interest rates between two countries is equal to the expected change in their exchange rates.

Foreign Currency Approach

A method in financial analysis or accounting that deals with the effects of exchange rates on foreign currency transactions and translations.

Swedish Krona

Sweden's recognized currency, abbreviated SEK.

Unbiased Forward Rates

Interest rates or currency exchange rates determined through analysis that are unaffected by expectations or speculation about future events.