AIRR
HelpRegister |
AIRR Having trouble getting my arms around the concept of AIRR. Help me understand it by answering this question. Suppose you invested 10000 in a Certificate of Deposit that returned 5% per year, compounded daily. On that same day you also invested 10000 in a portfolio of stocks, some of which paid dividends that were reinvested and all of which had fluctuations in price. At the end 12 months the porfolio had lost 2%. The CD paid 5% as expected. The AIRR of the porfolio would certainly be lower than the AIRR of the CD. At the end of 18 months the value of the porfolio surged to equal the value of CD. The values of both assets are equal.If calculated from the date of the initial investment, are the AIRRs also equal? If calculated for the time period starting with the end of 12 months and extending to the end of 18 months, are the AIRRs equal? |
|