How to calculate money weighted rate of return on calculator?

CFA Level III
#1

How would this calculation be entered into the cashflow function?

$3,000,000 = $800,000(1 + R)30 + $1,000,000(1 + R)30–10

Expressed on a monthly basis, MWR is 0.859709 or 86.0% [= (1 + 0.020896)30 – 1].

#2

Co=800,000

C01=0 (no cash flow in or out)

F01=9 - basically means no cash flow occurs for the next 9 days

C02=1,000,000

F02=1

C03=0

F03=19

C04= -3,000,000

F04= 1

compute IRR u will get 2.089546 this is daily convert to monthly as above.

#3

Thanks!

#4

Will we even be asked to calculate this?? The LOS mentions that we should be able to calcualte, but the text does mention that you would need sophisticated software to do this and I haven’t seen any MWR calculation questions.

#5

You can interpolate MWRR by trial and error by plug in rates into formula until you get the output but it is not 100 % precise.

If it would appear in multiple choice answer, simply plug each choice until you got output Ending value of portfolio.

#6

so far i have not seen any questions asking us to calculate MWR.

#7

I’d say the chances of an actual calculation on the exam are extremely low. I’d even say being asked to make Dietz calculations are pretty low as well (still, they have a little corner reserved in my brain just in case lol). However, the conceptual differences between MWR and TWRR methods are very testable and probably far more important than any calculations.

#8

Yeah, only questions I have seen so far is figure out why MWR return is higher/lower than TWR