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how to calculate weighted returns. Valuation - This is the value of the investment on the start date. After that you must divide the difference by the balance at the beginning of the period.
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The period is defined by an increase or decrease in the sum invested. Knowing these totals weighted average return can now be calculated by multiplying the percentage of the portfolio each stock takes up by the rate of return on each. For Stock A it is 02 multiplied by the four percent return or 8.
Identity all outflows and inflows.
CFA Institute This method can be useful for calculating the rate of return when there have been only small external cash flows during the measurement period relative to the size of the portfolio. After that you must divide the difference by the balance at the beginning of the period. Then divide the difference by the beginning balance of the period. The cash flows are shown in the table below.
