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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 (L03, CFA6) Suppose that an investor opens an account by investing $1,000. At the
beginning of each of the next four years, he deposits an additional $1,000 each year, and he then liquidates the account at the end of
the total five-year period. Suppose that the yearly returns in this account, beginning in Year 1, are as follows: -9 percent, 17 percent, 9
percent, 14 percent, and -4 percent. Calculate the arithmetic and geometric average returns for this investment, and determine what
the investor's actual dollar-weighted average return was for this five-year period. Why is the dollar-weighted average return higher or
lower than the geometric average return?
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