Roger Bacon, *Doctor Mirabilis, Opus Majus* (1214-1294)

Robert Helibroner (1919-2005)

In measuring the performance of a “portfolio” or collection of investment assets we are concerned with the increase or decrease in the value of those assets over a specific time period, in other words the change in “wealth”.

This change in wealth can be expressed either as a “wealth ratio” or a “rate of return”.

The wealth ratio describes the ratio of the end value of the portfolio relative to the start value, mathematically:**(2.1)**
where:*V*_{E} = the end value of the portfolio *V*_{S} = the start value of the portfolio.

A wealth ratio greater than 1.0 indicates an increase in value, a ratio less than 1.0 a decrease in value.

Starting with a simple example, take a portfolio valued at £100m initially and valued at £112m at the end of the period. The wealth ratio is calculated as follows:**Exhibit 2.1** Wealth ratio

The value of a portfolio of assets is not always easy to obtain, but should represent a ...

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