YEILD CALCULATION
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Posted by MARIOS S on March 20, 2001 at 02:30:46:
I HAVE A PROBLEM UNDERSTANDING HOW TO SET UP A PORTFOLIO WHICH WILL PRODUCE CORRECT GAIN% CALCULATIONS. I START WITH $1000 CASH. PRESUMABLY I RECORD IT AS A PURCHASE IN MY PRE-SET DEFAULT CASH ACCOUNT. I THEN USE THE $1000 TO BUY A STOCK. THIS STOCK GOES UP 10% IN VALUE. MY GAIN%-I APPEARS CORRECT AS 10%. BUT AT THE PORTFOLIO LEVEL THE GAIN%-I APPEARS AS 5%. I BELIEVE THIS IS BECAUSE THE INITIAL CAPITAL IS TREATED AS A PURCHASE WHEN REALLY IT WAS AN INITIAL CAPITAL CONTRIBUTION. IT SEEMS TO ME THAT ONCE YOU RECORD CAPITAL INFLOWS AS PURCHASES THEN RETURN CALCULATIONS ARE BOUND TO BE WRONG. PLEASE ENLIGHTEN
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