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The rate of return that discounts a portfolio's terminal value and interim cash flows back to its initial value. It is equivalent to a portfolio's internal rate of return. The dollar-weighted return can be misleading for purposes of performance measurement, because it is influenced by the timing and magnitude of contributions and disbursements that are beyond the control of the portfolio manager. An alternative measure of performance is the time-weighted rate of return which controls for cash flows. Also called Internal Rate of Return. See also Time-Weighted Rate of Return.
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