Apr 24, 2022 20:52
2 yrs ago
48 viewers *
English term

setting the value equal

English Bus/Financial Business/Commerce (general) Marketing
"Money-weighted rate of return is calculated by finding the rate of return that results from setting the present values of all cash flows equal to the value of the initial investment."

I'm totally at a loss as to what this means. It's in a document I'm translating, and it seems they've copied it from Investopedia's definition of MSRR (www.investopedia.com)

Can someone convert it into an easier to understand definition?

Thank you!!

Discussion

Luis M. Sosa Apr 25, 2022:
According to the definition given by Investopedia, that's just another way of calling the internal rate of return. So Laura, if you are translating to Spanish, use 'tasa interna de retorno'.


https://www.investopedia.com/terms/m/money-weighted-return.a...
Daryo Apr 24, 2022:
@ philgoddard Well being "native" to maths and finances you are surely going to offer in no time an "easy to understand alternative definition"? Curious to see it ... when you do that, you can also offer to correct the www.investopedia.com entry?
philgoddard Apr 24, 2022:
Daryo's being his usual helpful and constructive self.

It sounds like you may be having trouble with the whole definition rather than just the phrase you asked about. Here's one you may find easier to understand:
http://freetrade.io/dictionary/money-weighted-rate-of-return
Laura Vinti (asker) Apr 24, 2022:
Yes - sorry for the typo!
Daryo Apr 24, 2022:
to start with ... they've copied it from Investopedia's definition of MWRR

https://www.investopedia.com/terms/m/money-weighted-return.a...

as for

Can someone convert it into an easier to understand definition?

simple and only answer NO. Can be rephrased in few other ways, but it still won't make it any "simpler". You will still need the basics of how interests on capital are calculated, and the basics of geometric progressions.

Responses

+4
17 mins
Selected

making one value equal to another value

..
Peer comment(s):

agree philgoddard
30 mins
thanks
neutral Daryo : yes, it amounts roughly to that, but there are few important "nuances" missing - like the meaning of these two "values" what do they represent exactly.
2 hrs
agree Clauwolf
13 hrs
thanks
agree Anastasia Kalantzi
1 day 21 hrs
agree george r.
4 days
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4 KudoZ points awarded for this answer. Comment: "Thank you."
-2
6 mins

تعيين القيمة متساوية

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Peer comment(s):

disagree AllegroTrans : Question is English monolingual; what use is Arabic to Laura, an Italian native speaker? "they become 1 value" makes zero sense to me
1 min
Same figure of value for a group or one. They become 1 value.
disagree Jennifer Levey : Disagree with your answer in Arabic (wrong language), and with your 'explanation' under AT's 'disagree'.
1 hr
Something went wrong...
-3
55 mins

amount of money in = amount of money out

To calculate the money-weighted return, set the PV of cash inflows = PV cash outflows and solve for the discount rate.

There's a plain example in the website I cited as reference.
Peer comment(s):

disagree Daryo : nowhere near // the whole point of investing is that "money out" should be MORE than "money in"
1 hr
disagree Jennifer Levey : If your 'plain example' was truly 'plain', even I would be able to grasp the underlying principle. I can't :(
2 hrs
disagree AllegroTrans : Nor can I grasp your explanation
13 hrs
Something went wrong...
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