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Dollar.Weighted Arerage Return ( L 0 3 , CFA 6 ) Suppose that an investor opens an account by investing $ 1 , 0 0
Dollar.Weighted Arerage Return L CFA Suppose that an investor opens an account by investing $ At the
beginning of each of the next four years, he deposits an additional $ each year, and he then liquidates the account at the end of
the total fiveyear period. Suppose that the yearly returns in this account, beginning in Year are as follows: percent, percent,
percent, percent, and percent. Calculate the arithmetic and geometric average returns for this investment, and determine what
the investor's actual dollarweighted average return was for this fiveyear period. Why is the dollarweighted average return higher or
lower than the geometric average return?
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