Ladles Should Not Be Used as Measuring Devices

question 16

True/False

Ladles should not be used as measuring devices.

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Definitions:

Dollar Weighted

A method of measuring investment returns which accounts for the size and timing of cash flows into and out of the portfolio.

Time Weighted

A method of calculating investment returns that eliminates the effects of cash inflows and outflows on the performance.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Dollar-Weighted Return

A method of calculating an investment's return that takes into account the timing and amount of capital inflows and outflows.