Modified Dietz method: Difference between revisions

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Suppose that at the beginning of the year, a portfolio contains cash, of value $10,000, in an account which bears interest without any charges. At the beginning of the fourth quarter, $8,000 of that cash is invested in some US dollar shares (in company X). The investor applies a buy-and-hold strategy, and there are further transactions for the remainder of the year. At the end of the year, the shares have increased in value by 10% to $8,800, and $100 interest is capitalized into the cash account.

What is the return on the portfolio and the cash account over the year, and? whatWhat are the contributions from the cash account and the shares? Furthermore, what is the return on the cash account?

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