Hi,I know this could be a very simple question but I am superstitious since anything wrong with the measure could make me use many months of work. I have a database where the total dollar monthly return is reported. If I want to compute the monthly rate of return , I should just divide by the privious month's price. right?Best

Let Px_0 represent the price per unit at the end of period 0Px_1 represent the price per unit at the end of period 1Mult_0 represent the pricing factor/consideration constant at end of period 0Mult_1 represent the pricing factor/consideration constant at end of period 1(Note that the valuation multiple is usually constant. Capital changes, principal paydowns, etc. may change the factor.)Acc_0 represent the accrual per unit at the end of period 0Acc_1 represent the accrual per unit at the end of period 1Dist represent the distributions per unit in the period (including income received)A common way to calculate the return is(Px_1 * Mult_1 + Acc_1 + Dist) / (Px_0 * Mult_0 + Acc_0) - 1an alternative is to remove the beginning accrual from the calculation(Px_1 * Mult_1 + Acc_1 + Dist) / (Px_0 * Mult_0) - 1The above calcs do not include any currency translation adjustments. EDIT: I may have misread what you are asking. You have the return already? I do not follow.

I have the total dollar return and not the rate of return . so i have just divided this total dollar return by the beginning period return to calculate the rate of return

This method ignores reinvestment between payment intervals. That might or might not be significant. For example, suppose you hold a bond that pays 6% per year. It costs $100 at the beginning of the year, and has a dollar return of $6 during the year. You divide $6 by $100 to get a 6% return. That's fine, but it gives the same answer whether the bond pays annually at the beginning of the year or the end of the year, and if the bond pays annually, semi-annually, quarterly, monthly or daily. Those things can make a difference.