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!!
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!!
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
|
4 KudoZ points awarded for this answer.
Comment: "Thank you."
-2
6 mins
تعيين القيمة متساوية
-
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
|
-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.
There's a plain example in the website I cited as reference.
Reference:
https://corporatefinanceinstitute.com/resources/knowledge/finance/money-vs-time-weighted-return/
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
|
Discussion
https://www.investopedia.com/terms/m/money-weighted-return.a...
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
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.