Hi..how do we consider the time periods in the example....ie from 1st Dec 2005 to 1st March 2006...ain't they 3 periods???it then follows .. 10(1+I)^9/12 Why is that 10/12 is used???
indeed time period used is monthly. So take it that the date at which the return is being calculated is 31st Dec 2006, and the cash flows are being accumulated (compounded monthly) to equal the current position i.e. 11000. So from 1 March to 31 Dec 2016, there are 10 months, hence 10/12.
