I have a question about ROI calculation.

[Ton]

Hi Mark,

I am a new user of the program. I really like it.

I have a question about ROI calculation.

If I have following transactions,

- I bought a share on 6/3/2010 for 1$.
- I sell a share on 7/3/2010 for 1.1$.

Then, I calculate for ROI between 6/3-7/3. The ROI is 21%.

I think it should be 10%, right?

Could you explain to me where the 21% come from?

Thank you!

[Mark]

Hi Ton,

I assume your question is stated where your dates are in the MM/DD/YY format, and not DD/MM/YY.

If you are calculating a ROI yield from March 6 to March 7, this is a 2 day long yield term. Yield terms are inclusive of the starting and ending dates. If you purchased on March 6, Fund Manager considers you as having held that for only 1 day as of the end of March 7. So, you did earn 10% over a 1 day period, but you are calculating a 2 day yield. ROI yields are time and money weighted. For the first day you owned $0, so there is no weighting. For the second day you earned at a rate of 10%. Extrapolating that 1 day 10% number to 2 days gives you the 21%. If instead you calculated the ROI yield from March 7 through March 7 you would get the 10% number you're looking for.

[Ton]

Thank you. It answers my question.