Smith & Jones is a money management firm specializing in fixed-income securities. One of its clients gave the firm $100 million to manage. The market value for the portfolio for the four months after receiving the funds was as follows:
a. Calculate the rate of return for each month.
b. Smith & Jones reported to the client that over the four-month period the average monthly rate of return was 33.33%. How was that value obtained?
c. Is the average monthly rate of return of 33.33% indicative of the performance of Smith & Jones? If not, what would be a more appropriate measure?