One Reason the Time-Weighted Returns Calculation Is Preferable to the Dollar-Weighted

question 45

Multiple Choice

One reason the time-weighted returns calculation is preferable to the dollar-weighted returns calculation is because the

• A) latter measure is strongly impacted by the size and timing of cash flows
• B) former measure always overestimates returns
• C) latter measure will not account for dividends
• D) latter measure is overly price-sensitive

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Definitions:

Consulting Fees-Revenue

Income earned by an individual or a company for providing professional advice or services to clients.

Cash

A form of liquid asset that consists of currency, including coins and banknotes, which can be used immediately for transactions.

Supplies Expense

The cost associated with consumable supplies used during an accounting period in the operation of a business.

Supplies

Items used in the day-to-day operations of a business, such as office supplies, which are essential for conducting business activities.