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Commit bd8418f

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feat: Added basic finance ratios, NPV sensitivity and Treynor ratio to the financial module (TheAlgorithms#937)
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‎DIRECTORY.md‎

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* [Word Break](https://github.com/TheAlgorithms/Rust/blob/master/src/dynamic_programming/word_break.rs)
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* Financial
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* [Present Value](https://github.com/TheAlgorithms/Rust/blob/master/src/financial/present_value.rs)
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* [Net Present Value](https://github.com/TheAlgorithms/Rust/blob/master/src/financial/npv.rs)
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* [NPV Sensitivity](https://github.com/TheAlgorithms/Rust/blob/master/src/financial/npv_sensitivity.rs)
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* [Compound Interest](https://github.com/TheAlgorithms/Rust/blob/master/src/financial/compound_interest.rs)
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* [Payback Period](https://github.com/TheAlgorithms/Rust/blob/master/src/financial/payback.rs)
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* [Finance Ratios](https://github.com/TheAlgorithms/Rust/blob/master/src/financial/finance_ratios.rs)
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* [Treynor Ratio](https://github.com/TheAlgorithms/Rust/blob/master/src/financial/treynor_ratio.rs)
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* General
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* [Convex Hull](https://github.com/TheAlgorithms/Rust/blob/master/src/general/convex_hull.rs)
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* [Fisher Yates Shuffle](https://github.com/TheAlgorithms/Rust/blob/master/src/general/fisher_yates_shuffle.rs)

‎src/financial/compound_interest.rs‎

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// compound interest is given by A = P(1+r/n)^nt
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// where: A = Final Amount, P = Principal Amount, r = rate of interest,
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// n = number of times interest is compounded per year and t = time (in years)
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pub fn compound_interest(principal: f64, rate: f64, comp_per_year: u32, years: f64) -> f64 {
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principal * (1.00 + rate / comp_per_year as f64).powf(comp_per_year as f64 * years)
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}
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#[cfg(test)]
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mod tests {
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use super::*;
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#[test]
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fn test_compound_interest() {
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let principal = 1000.0;
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let rate = 0.05; // 5% annual interest
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let times_per_year = 4; // interest compounded quarterly
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let years = 2.0; // 2 years tenure
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let result = compound_interest(principal, rate, times_per_year, years);
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assert!((result - 1104.486).abs() < 0.001); // expected value rounded to 3 decimal
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// places
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}
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}

‎src/financial/finance_ratios.rs‎

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// Calculating simple ratios like Return on Investment (ROI), Debt to Equity, Gross Profit Margin
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// and Earnings per Sale (EPS)
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pub fn return_on_investment(gain: f64, cost: f64) -> f64 {
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(gain - cost) / cost
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}
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pub fn debt_to_equity(debt: f64, equity: f64) -> f64 {
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debt / equity
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}
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pub fn gross_profit_margin(revenue: f64, cost: f64) -> f64 {
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(revenue - cost) / revenue
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}
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pub fn earnings_per_sale(net_income: f64, pref_dividend: f64, share_avg: f64) -> f64 {
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(net_income - pref_dividend) / share_avg
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}
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#[cfg(test)]
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mod tests {
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use super::*;
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#[test]
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fn test_return_on_investment() {
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// let gain = 1200, cost = 1000 thus, ROI = (1200 - 1000)/1000 = 0.2
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let result = return_on_investment(1200.0, 1000.0);
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assert!((result - 0.2).abs() < 0.001);
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}
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#[test]
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fn test_debt_to_equity() {
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// let debt = 300, equity = 150 thus, debt to equity ratio = 300/150 = 2
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let result = debt_to_equity(300.0, 150.0);
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assert!((result - 2.0).abs() < 0.001);
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}
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#[test]
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fn test_gross_profit_margin() {
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// let revenue = 1000, cost = 800 thus, gross profit margin = (1000-800)/1000 = 0.2
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let result = gross_profit_margin(1000.0, 800.0);
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assert!((result - 0.2).abs() < 0.01);
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}
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#[test]
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fn test_earnings_per_sale() {
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// let net_income = 350, pref_dividend = 50, share_avg = 25 this EPS = (350-50)/25 = 12
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let result = earnings_per_sale(350.0, 50.0, 25.0);
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assert!((result - 12.0).abs() < 0.001);
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}
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}

‎src/financial/mod.rs‎

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mod compound_interest;
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mod finance_ratios;
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mod npv;
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mod npv_sensitivity;
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mod payback;
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mod present_value;
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mod treynor_ratio;
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pub use compound_interest::compound_interest;
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pub use npv::npv;
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pub use npv_sensitivity::npv_sensitivity;
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pub use payback::payback;
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pub use present_value::present_value;
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pub use treynor_ratio::treynor_ratio;
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pub use finance_ratios::debt_to_equity;
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pub use finance_ratios::earnings_per_sale;
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pub use finance_ratios::gross_profit_margin;
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pub use finance_ratios::return_on_investment;

‎src/financial/npv.rs‎

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/// Calculates Net Present Value given a vector of cash flows and a discount rate.
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/// cash_flows: Vector of f64 representing cash flows for each period.
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/// rate: Discount rate as an f64 (e.g., 0.05 for 5%)
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pub fn npv(cash_flows: &[f64], rate: f64) -> f64 {
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cash_flows
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.iter()
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.enumerate()
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.map(|(t, &cf)| cf / (1.00 + rate).powi(t as i32))
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.sum()
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}
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// tests
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#[cfg(test)]
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mod tests {
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use super::*;
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#[test]
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fn test_npv_basic() {
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let cash_flows = vec![-1000.0, 300.0, 400.0, -50.0];
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let rate = 0.10;
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let result = npv(&cash_flows, rate);
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// Calculated value ≈ -434.25
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assert!((result - (-434.25)).abs() < 0.05); // Allow small margin of error
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}
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#[test]
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fn test_npv_zero_rate() {
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let cash_flows = vec![100.0, 200.0, -50.0];
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let rate = 0.0;
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let result = npv(&cash_flows, rate);
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assert!((result - 250.0).abs() < 0.05);
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}
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#[test]
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fn test_npv_empty() {
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// For empty cash flows: NPV should be 0
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let cash_flows: Vec<f64> = vec![];
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let rate = 0.05;
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let result = npv(&cash_flows, rate);
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assert_eq!(result, 0.0);
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}
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}

‎src/financial/npv_sensitivity.rs‎

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/// Computes the Net Present Value (NPV) of a cash flow series
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/// at multiple discount rates to show sensitivity.
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///
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/// # Inputs:
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/// - `cash_flows`: A slice of cash flows, where each entry is a period value
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/// e.g., year 0 is initial investment, year 1+ are returns or costs
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/// - `discount_rates`: A slice of discount rates, e.g. `[0.05, 0.10, 0.20]`,
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/// where each rate is evaluated independently.
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///
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/// # Output:
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/// - Returns a vector of NPV values, each corresponding to a rate in `discount_rates`.
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/// For example, output is `[npv_rate1, npv_rate2, ...]`.
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pub fn npv_sensitivity(cash_flows: &[f64], discount_rates: &[f64]) -> Vec<f64> {
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discount_rates
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.iter()
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.cloned()
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.map(|rate| {
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cash_flows
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.iter()
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.enumerate()
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.map(|(t, &cf)| cf / (1.0 + rate).powi(t as i32))
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.sum()
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})
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.collect()
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}
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#[cfg(test)]
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mod tests {
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use super::*;
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#[test]
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fn test_npv_sensitivity() {
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let cashflows = [-1000.00, 400.00, 400.00, 400.00];
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let rates = [0.05, 0.1, 0.2];
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let expected = [89.30, -5.26, -157.41];
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let out = npv_sensitivity(&cashflows, &rates);
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assert_eq!(out.len(), 3);
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// value check
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for (o, e) in out.iter().zip(expected.iter()) {
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assert!((o - e).abs() < 0.1);
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}
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}
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}

‎src/financial/payback.rs‎

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/// Returns the payback period in years
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/// If investment is not paid back, returns None.
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pub fn payback(cash_flow: &[f64]) -> Option<usize> {
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let mut total = 0.00;
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for (year, &cf) in cash_flow.iter().enumerate() {
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total += cf;
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if total >= 0.00 {
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return Some(year);
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}
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}
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None
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}
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#[cfg(test)]
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mod tests {
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use super::*;
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#[test]
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fn test_payback() {
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let cash_flows = vec![-1000.0, 300.0, 400.0, 500.0];
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assert_eq!(payback(&cash_flows), Some(3)); // paid back in year 3
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}
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#[test]
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fn test_no_payback() {
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let cash_flows = vec![-1000.0, 100.0, 100.0, 100.0];
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assert_eq!(payback(&cash_flows), None); // never paid back
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}
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}

‎src/financial/treynor_ratio.rs‎

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/// Calculates the Treynor Ratio for a portfolio.
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///
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/// # Inputs
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/// - `portfolio_return`: Portfolio return
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/// - `risk_free_rate`: Risk-free rate
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/// - `beta`: Portfolio beta
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/// where Beta is a financial metric that measures the systematic risk of a security or portfolio compared to the overall market.
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///
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/// # Output
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/// - Returns excess return per unit of market risk
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pub fn treynor_ratio(portfolio_return: f64, risk_free_rate: f64, beta: f64) -> f64 {
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if beta == 0.0 {
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f64::NAN
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} else {
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(portfolio_return - risk_free_rate) / beta
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}
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}
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#[cfg(test)]
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mod tests {
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use super::*;
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#[test]
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fn test_treynor_ratio() {
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// for portfolio_return = 0.10, risk_free_rate = 0.05, beta = 1.5
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// expected result: (0.10 - 0.05) / 1.5 = 0.033333...
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assert!((treynor_ratio(0.10, 0.05, 1.50) - 0.03333).abs() < 0.01);
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}
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#[test]
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fn test_treynor_ratio_empty_beta() {
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// test for zero beta (undefined ratio)
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assert!(treynor_ratio(0.10, 0.05, 0.00).is_nan());
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}
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}

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