Question: Suppose that the monthly return for two bond managers is as follows: Month Manager I Manager II 1 9% 25% 2 13% 13% 3 22%

Suppose that the monthly return for two bond managers is as follows:

Month	Manager I	Manager II
1	9%	25%
2	13%	13%
3	22%	22%
4	-18%	-24%

the arithmetic average monthly rate of return for the two managers

Manager I = 6.50%

Manager II = 9.00%

the time-weighted average monthly rate of return for the two managers

Manager I = 5.36%

Manager II = 6.98%

c.Why does the arithmetic average monthly rate of return diverge more from the time-weighted monthly rate of return for manager II than for manager I?

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