Essay
A client has €1 million invested in European equity at the start of the quarter. After one month the portfolio value is €1.1 million and the client who needs cash withdraws €200,000. At the end of the quarter the portfolio is worth €900,000. Over the quarter, the European equity index, used as a benchmark, gained 15%.
a. What are the rates of returns using the various methods outlined in the text?
b. Which rate should you use to evaluate the performance of the manager relative to its benchmark?
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