The "dollar-weighted" rate of return measure incorporates which of the following in its return calculation?
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A. B. C. D. E. F.F
Performance measurement is an important consideration for the CFA candidate, and can be a particularly difficult task in situations where the portfolio under consideration is subject to additions and withdrawals. Two performance measurement tools discussed in the Level I readings are the "dollar-weighted rate of return" and the "time-weighted rate of return." In fact, the dollar-weighted rate of return is simply another name for the IRR equation. In investment management applications, the IRR equation is commonly referred to as the "dollar-weighted rate of return" because it accounts for the timing and scope of all cash flows.