Dear Aswath, how to calculate a portfolio yeld, if during the period I have cash inflows and outflows from the portfolio.

Question

anonymous · Answer

Use your net cash flow.

anonymous · Answer

Is it right solving the equation PV of Inflows=PV of Outflows to find the profitibility of portfolio (r)?

anonymous · Answer

dude use weighted average method to find the overall return of the portfolio.
like if the portfolio consist of n stocks then, 
R(p)=$$\sum_{i}^{n}=$$ (Wi*Ri)
where
R(p)=return of portfolio
wi=weight of ith stock
ri=return of ith stock

anonymous · Answer

$$R(p)=\sum_{i}^{n} (Ri \times Wi)$$

anonymous · Answer

You're right, but during the period I have cash inflows and outflows from the portfolio.The problem is in adjustments of portfolio value with earnings generated by net cash flows.I preffer Money-weighted rate of return...