Can anyone tell me below mentioned way of calculating average rate of return for bond portfolio is correct or not? If any short coming here?
Avg balance of monthly Portfolio 12,811,089,655
Intrest income for the month 64,893,792
Average rate of intrest for the month 6.08%
=(64,893,792*360*100) / (12,811,089,655*30) = 6.08%
30 is number of days for the month
360-number of days for year
Simplifying my calculation,
Interet income for the month = 64,893,792
Daily interest income = 64,893,792/30
Therefore Annual Int Income = 64,893,792*360/30 = 778,725,504
Average rate of return for the portfolio is calculated as follows.
Annual Int income*100/ avg balance of portfolio for a month = 778,725,504*100/ 12,811,089,655
This equals 6.08% rate of return for the portfolio,
Appreciate very much for any feedback on this calculation.