I found in Schweser “MWRR only requires a beginning and end of period market value.”
And MWRR is easy to calculate (Vol 2, exam 1 pm)
What? So we dont need external cashflows to calculate mwrr? And Mwrr is really easy to calculate?
MWRR does not require compounding (T1+CF/Tt-1). It is simply an IRR and you treat all cash inflows as inflows and all cash outflows as outflows including an initial one with ± prefix. The only challenge might be in fact if you have many days with certain inflow/outflows in calculation so it is more difficult to calculate with BAII Plus.
But MWRR is, given above, biased with large CFs.
But do you agree that you need the CF to calculate the IRR , and not only the MV_0 and MV_T, don’t you?
Besides, the MWRR is really easy to calculate (compared to TWRR?)?
You need each periodical -+ CF in forms of buying/selling a stock, dividend inflows etc.
It is easy if you have few CFs. You can capture with IRR module on your calculator.
The interpretation of the quote is that MWRR requires only market value at t = 0 and t = T, while TWRR requires a market value at each (large) external cash flow. Both require cash flows but different requirements for market value.
It makes sense, I understand now the point of CFAI even I still don’t totally agree.
thank you 