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Advanced Math/Averaging percentages while using Time-Weighted Rate of Return.

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Hi I hope you can help me it would be really appreciated, am currently facing an issue with calculating the average percentage using Time-Weighted Rate of Return.

Here is a link of what i am doing - http://www.dailyvest.com/prr/prr_calcmethods.aspx#twrr-dailyval

My issue is that if i have 1,000, which is reduced to 1 this is a loss of 99.9% and numerically speaking is -0.999 which when added to 1 will give you 0.001

I then top up 500 to the account and make 200% turning the 500 into 1500 numerically speaking this would be 2 which when added to 1 will give you 3.

My issue arises when I times them together...
0.001 x 3 = 0.003 - 1 x 100 = -99.7%

This cant be correct? this formula works perfectly as long as it doesn't go into an extreme percentage.

Please could you shed some light on this, i am not the best when it comes to this, apologies if I haven't explained it very well.

Kind Regards,
Jamie

Answer
It sounds like when the account went to 1, you added another 499 to make it 500.  Right?

Since there was some added in the middle, the calculation shown is not right.

The calculation that needs to be done is to take ((1,000 * 0.001) + 499)(1+2) = 1,500.

If I have read it correctly, the real profit is (1,000 + 500/(1,000 + 499) = 1
(really it is 1.000667111, which is close enough to 1 to call it 1).

In other words, you invested 1,000 + 499 = 1,499 and the value now in the account is 1,500.

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Scott A Wilson

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I can answer any question in general math, arithetic, discret math, algebra, box problems, geometry, filling a tank with water, trigonometry, pre-calculus, linear algebra, complex mathematics, probability, statistics, and most of anything else that relates to math. I can also say that I broke 5 minutes for a mile, which is over 12 mph, but is that relevant?

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Experience in the area; I have tutored people in the above areas of mathematics for over two years in AllExperts.com. I have tutored people here and there in mathematics since before I received a BS degree back in 1984. In just two more years, I received an MS degree as well, but more on that later. I tutored at OSU in the math center for all six years I was there. Most students offering assistance were juniors, seniors, or graduate students. I was allowed to tutor as a freshman. I tutored at Mathnasium for well over a year. I worked at The Boeing Company for over 5 years. I received an MS degreee in Mathematics from Oregon State Univeristy. The classes I took were over 100 hours of upper division credits in mathematical courses such as calculus, statistics, probabilty, linear algrebra, powers, linear regression, matrices, and more. I graduated with honors in both my BS and MS degrees. Past/Present Clients: College Students at Oregon State University, various math people since college, over 7,500 people on the PC from the US and rest the world.

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My master's paper was published in the OSU journal. The subject of it was Numerical Analysis used in shock waves and rarefaction fans. It dealt with discontinuities that arose over time. They were solved using the Leap Frog method. That method was used and improvements of it were shown. The improvements were by Enquist-Osher, Godunov, and Lax-Wendroff.

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Master of Science at OSU with high honors in mathematics. Bachelor of Science at OSU with high honors in mathematical sciences. This degree involved mathematics, statistics, and computer science. I also took sophmore level physics and chemistry while I was attending college. On the side I took raquetball, but that's still not relevant.

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I earned high honors in both my BS degree and MS degree from Oregon State. I was in near the top in most of my classes. In several classes in mathematics, I was first. In a class of over 100 students, I was always one of the first ones to complete the test. I graduated with well over 50 credits in upper division mathematics.

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My clients have been students at OSU, people who live nearby, friends with math questions, and several people every day on the PC. I would guess that you are probably going to be one more.

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