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Medium · portfolio_optimization · Quant Researcher interview question · performance_measurement, modified_dietz, time_weighted_return, cash_flow_adjustment, portfolio_optimization
The Modified Dietz method is a performance measurement tool used to calculate a portfolio's return while accounting for the timing and magnitude of external cash flows. It approximates a true time-weighted return by weighting each cash flow by the time it was held in the portfolio. This technique is widely used in institutional asset management for performance reporting when daily valuations are not feasible. Task Implement the function modified_dietz_return(start_value, end_value, cash_flows,