Dollar Weighted Rate of Return | Exam FM | Financial Mathematics Lesson 26 - JK Math

How To Find the Dollar-Weighted Rate of Return (Financial Mathematics Lesson 26)

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In this lesson we learn about how to calculate the dollar-weighted rate of return (DRR), which is more commonly used for reporting the return or yield of an investment fund on a yearly basis. The DRR is similar to the internal rate of return (IRR), but is based on simple interest rather than compound interest. We look at how to set up a timeline for scenarios where we want to calculate the DRR, and how to set up an equation of value based on that timeline to solve for the DRR.

This course is designed to help students understand the concepts of mathematics of investment and credit, as well as provide a starting point in preparation for the Actuarial Exam FM (Financial Mathematics).

Financial Mathematics requires a proficient understanding of Calculus concepts such as derivative and integration techniques. This implies that a solid understanding in various algebra skills, including manipulating equations, basic factoring methods, solving logarithmic equations, and more, are also required to fully comprehend and learn the concepts of the Financial Mathematics course.

Video Chapters:
0:00 What is a Dollar-Weighted Rate of Return (DRR)?
1:49 Example Part 1 - Calculating DRR
11:41 Example Part 2 - Comparing to IRR


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