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What is the major difference between the money-weighted and time-weighted rate of return? The money-weighted return: A. computes the return more precisely using the internal rate of return computation while time-weighted return computation is an approximation. B. penalizes managers for cash flows that occur outside of their control while the time-weighted return does not. C. is averaged across periods to arrive at an annual rate of return while the time-weighted return is compounded across periods to arrive at an annual rate of return. |