Daily MWR Using HP 12C

CFA Level III
#1

I am having some difficulty obtaining Daily MWR results using HP 12C in SS16. For instance one question provides for an intial value of $750,000 at the start of the month, on day 22, a contribution of $20,000 is made. At the end of the month, the account is worth $1,266,513. Assuming 30 day month, what is the daily MWR? Using the HP 12c - I follow the steps: 1) 750000 g CFo 2) 20000 g CFj 3) 1266513 chs g CFj 4) f IRR I obtain 28.622% which is the Monthly MWR, the answer to this question should be 1.7%. I am sure there is a minor twist, but for the life of me, I can’t figure it out. Much appreciated.

#2

It’s found my trial and error. the formula would be: 1266513 = 750000*(1+r)^30 + 20000*(1+r)^(30-22) Solve for r. It’s easiest to do this in Excel. If you did it in your 12c, I guess the only thing you could do is enter in 30 different cashflows representing each day, enter 0 for those with no cashflow. and then solve for IRR.

#3

For the HP12c you would enter this: CFo = -750000 CF1 = 0 CF2 = 0 . . . CF22 = -20000 CF23 = 0 . . . CF30 = 1226513 Then hit the IRR button **edit** actually the HP12c has a limit so I dont think you would be able to enter all this into the calculator, but this is how you could solve it. If it was a shorter time period.

#4

Thanks bigwilly…this is helpful. What still bothers me a bit is the daily MWR. In another example: MV0=900,000 at the start of the month, On day 15, CF is 50,000, at the end of the month MV1=1,466,663. The Q asks for MWR (assuming 30 days in month). Using hp 12C 900,000 g CFo 50,000 g CFj -1,466,553 g CFj f IRR I obtain the correct answer which is 24.9%. That’s why I am thinking there might be a way to derive a daily MWR from a Monthly MWR. For instance to calculate daily St. Dev. from Annual St. Dev. we divide by root of 250, to obtain Monthly St. Dev. we divide Annual ST. Dev. by root of 12. etc. Any thoughts?

#5

That works b/c it’s in the middle of the month. If it was the 14th or 16th your answer would be off slightly. Off the top of my head I can’t think of another way on the HP12c.