Modified Dietz method: Difference between revisions

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==The simple Dietz method==
The modified Dietz method is different from the [[simple Dietz method]], in which the cash flows are weighted equally regardless of when they occurred during the measurement period. The [[simple Dietz method]] is a special case of the Modified Dietz method, in which external flows are assumed to occur at the midpoint of the period, or equivalently, spread evenly throughout the period, whereas no such assumption is made when using the Modified Dietz method, and the timing of any external flows is taken into account.
Note that in the example above, the flow occurs midway through the overall period, which matches the assumption underlying the simple Dietz method. This means the simple Dietz return and modified Dietz return are the same in this particular example.
 
==Adjustments==