>We believe, but we are not sure, that the Microsoft-Money "Annual % Return" is >the Internal Rate of Return (IRR). See >http://support.microsoft.com/kb/131664. We believe that the IRR is the "best" >measure of return, because it allows any two investments to be meaningfully >compared.. The calculation is non-trivial. I recommend "Financial >Calculation Programs for Linux" by James Shapiro at >http://www.linuxjournal.com/article/2545. He gives C, Java, and Perl programs >for calculating IRR. > > Close. But just IRR by itself without including its standard deviation for the time period doesn't allow proper comparison of investments. Not that past measures of "risk" provide a certain measure for the future but it's the best that is available. The point here is that investment A with an IRR of M but a large deviation might not be a better than investment B with an IRR of N slightly smaller than M but with a much smaller deviation. The usual idea is that the real comparison gets made after adjusting for risk -- how much of the higher yielding would instead have to be invested at low yield very low risk to bring the blend to the same deviation -- and then use that blended yield.
The problem is that the deviation can't be simply calculated from the beginning and ending states but needs the history in between. Michael _______________________________________________ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel
