MWR: Money-weighted rate of return and TWR: Time-weighted rate of return (for the @CFA Level 1 exam) explores the two method of computing portfolio performance and their application.
Пікірлер: 51
@vikasbeerbahadursingh1172 Жыл бұрын
okay, so TWR is geometric mean of holding period returns and MWR is IRR of the cashflows
@letmeexplaincfa Жыл бұрын
Yes, precisely👍
@CleytonBanda-gk9zb14 күн бұрын
Very well explained. Thank you for making things more clear
@omkarparab748319 күн бұрын
Nice explanation.
@Darth.CaedusАй бұрын
Hi, just wanted to say that your videos are of immense help!
@letmeexplaincfaАй бұрын
🙏
@arthurpinto95613 күн бұрын
great video!
@Mootolani7 ай бұрын
Thank You. This simplified the learning for me
@letmeexplaincfa7 ай бұрын
Great to hear, thanks!
@nadiiakhalus3445 ай бұрын
Dear Wojciech, thanks for the super clear explanation and "HI" from Ukraine :)
@letmeexplaincfa5 ай бұрын
Thank you so much. Brilliant to receive, especially from Ukraine👍👍👍
@jeanie0722 Жыл бұрын
Thank you so much for this explanation!!!!
@letmeexplaincfa Жыл бұрын
You're very welocme!
@TheKgpatriot9 ай бұрын
Wonderful explanation! dziękuję you so much! hello from Kyrgyzstan
@letmeexplaincfa9 ай бұрын
You are very 🤗😉
@pablomendezleiva325711 ай бұрын
what a master! thank you so much
@letmeexplaincfa11 ай бұрын
Thank you so much!
@Shankar-lz7zsАй бұрын
Very nice explanation
@user-dg3dl8od3u7 ай бұрын
you are the best, thanks a lot
@letmeexplaincfa7 ай бұрын
Thank you so much!
@sl48965 ай бұрын
Thank you so much explaining. I am going to take my L1 exam in a few months. Hello from India ♥
@letmeexplaincfa5 ай бұрын
Thank you for the comment👍 great to get greetings from 🇮🇳 🤗
@davidwayne98643 күн бұрын
Your videos are a god send , but I am having trouble grasping the concept of why irr is mwr.. is there a video on your page talking about the conceptual aspect of this topic ? Thank you again
@letmeexplaincfaКүн бұрын
There is another video on this topic in the Member's section but it does not really explain all that much more :) Simply put, the MWR is the IRR. That's what it's designed to be.
@ElBlancoFinance7 ай бұрын
Well done!
@letmeexplaincfa7 ай бұрын
🙏 thanks
@maryamelomari27456 ай бұрын
excellent
@letmeexplaincfa6 ай бұрын
Thank you so much!
@himanshubarnwal934Ай бұрын
so, TWR is some sort of CGAR in future ? is there any place where we use arithmetic mean for calculation of return or do we always use geometric mean ?
@letmeexplaincfaАй бұрын
Yes, I think you could think of it this way. We use the arithmetic avg of returns as a the expected value of single period returns.
@adnanbushnaq79733 ай бұрын
Hello, can I please ask for the TWR when you calculated the HPR for year 2 why did you not add 20 for the dividends? Didn’t you have two shares by the end of period 2?
@letmeexplaincfa3 ай бұрын
Yes, we had two shares, that's true. But computing the HPR for the period would be the same if I based it on a single share or two shares. In this example I computed everything on the basis of a single share (beginning and end of period prices as well as the dividend are stated on a per share basis). The TWR is not sensitivite to how big the investment really was, which is why you can take these shortcuts.
@user-fr6bo7xo4b9 ай бұрын
Hi, thank you for the video! @8:57 shouldn't D2 be 20 because the dividend received is from both shares?
@kpgamers33448 ай бұрын
It should have been the case if he calculated for total value Like 380+20/340
@letmeexplaincfa6 ай бұрын
As in the post below, it doesn't really matter if you are calculating on a per one or two shares basis.
@lolitashichman57533 ай бұрын
Hey ! Quick question- when I enter the numbers under my BA II calculator when I try to IRR Compute I get an Error 5 what I’m I doing wrong?
@letmeexplaincfa3 ай бұрын
I think you may be entering CF0 without the minus sign.
@787GX2 ай бұрын
Question: 1: Shouldn't the CF0 be the beginning stock acquisition + the end year purchase (it still in the first year) ? 2: If I am wrong on the first question, then shouldn't the CFO be $140 because she bought one at the beginning of the year? 3: On the calculator why didn't you insert a F01? the frequency of cash flow?
@tolapii2 ай бұрын
as I understand, CF0 represents the cash flow at the beginning of year one (outflow is negative, inflow is positive), she used $150 to buy a share (she spent $150) => outflow = -150. The end-year 1st purchase is considered as the beginning of the 2nd year's purchase.
@letmeexplaincfa2 ай бұрын
Yes, CFO is the cash flow at the beginning of the period (not to be confused with Year 1). You need to keep this cash flow separate from anything that happens at the end of the first year (C01). You only input anything for frequency when a cash flow occurs more than once. By default it is set to 1 (one-time occurence), so you can leave it untouched.
@user-ih2bq7bs4d Жыл бұрын
@8:55, shouldn't P1 = 180? So the starting value of the second period should correspond to the ending value of the first period? Thanks for clarification!
@letmeexplaincfa Жыл бұрын
Hi Patrick, well that would only be the case if we assumed that the first dividend - D1 were reinvested. The assumption here is that the dividend is cashed out so what the investor has in the portfolio going into year 2 is a stock worth 170. Please assume this logic in CFA Level 1 questions unless told otherwise👍
@angeloentardi14942 ай бұрын
@@letmeexplaincfa1q
@SchmittJoao2 ай бұрын
@@letmeexplaincfa first of all, thank you for the explanation, simple and clear, sir. But I thought the same thing, and was thinking that this "not reinvisted dividend" can be interpreted as distributed by the porfolio manager to investers in which case the calculation makes perfect sense, but if we interpret that the manager makes a choice not to reinvest but use this dividend to increase the fund's cash position (let's say the manager foresses that some investment oportunity is likely to be available soon), then it seems to me that the dividend should be considered in the value of the initial position of the second year. Do you agree?
@letmeexplaincfa2 ай бұрын
@@SchmittJoao Yes, you are correct. If the dividend had stayed in the fund and were reinvested then it would increase the opening balance for the next year.
@SchmittJoao2 ай бұрын
Thank you!
@John-ks9cr2 ай бұрын
May someone tell me what’s the calculator app the lecturer used?😊
@letmeexplaincfa2 ай бұрын
It’s called BA II Plus financial Calc from the App Store😀
@John-ks9cr2 ай бұрын
@@letmeexplaincfa 🙏
@3378577 ай бұрын
Too many commercials in a 15 min video - six commercials. My brain is just dead now.
@letmeexplaincfa7 ай бұрын
Unfortunately, I do not have much influence over how many commercials YT shows in these videos :(