Modified Ditz vs. TWR

When should we use Modified Dietz? I got confused on that Mock #57 question because I thought we had to use Modified Dietz. How do we know when to use MD or TWR?

you use TWR between months, MD to get monthly return, and that if they tell you to do so. cause TWR would be a right way

If I tell you that May 1st MV was 100 and May 31st MV was 200 but there was a 50 contribution on May 20th. You could only use Modified Dietz b/c you dont have a valuation on the 20th when it was contributed. But if I told you the MV on the 20th not including the contribution was 180 then you should use TWR.

Got it - I should stop over-thinking these problems. Sometimes it is as easy at it seems.

good point willy!

How do you apply the Deitz again?

quorky Wrote: ------------------------------------------------------- > How do you apply the Deitz again? I was stumped during the Schweser exams too when they asked this: Modified Dietz: (Ending Val. - Beg. Val. - CF) / (Beg. Val + Wgt. CF) Where Wgt. CF is: # of days CF is included / # of total days in period If there are multiple CFs, then you would have to do a wgt. sum of them all.

oh wow, I hate that. thanks for the clarification.

I do not believe the LOS says to calculate the MD. Is there any reason to think otherwise?

willy, what you said is nice but, should you do it now. or after 2010 (like there is not enough rules we have to memorize the effective dates)

Not sure why everyone is spending so much time on the calculation/formulas of these. Just know the main concept behind each and how they are different.

in this question, the CF was negative, why was it then not added back into the asset value?

Turk, you can only use MD up until 2010 b/c after that the portfolios MUST be valued on the date of any large external cashflow (usually >10% of portfolio value).

can someone please answer thsi question? if the CF was negative why wasnt it added back to the asset value?

anyone please?

in mock question the CF was negative. it should have been added back but it wasnt. why?

the mock question was wrong

Yes the (-) was wrong, but the problem could have still be easily answered when you realized the 30% or so wasn’t an answer.

thanks. they sure mess your mind up.