The money-weighted return (also known as dollar-weighted return) is calculated as the internal rate of return (IRR) that equates the present value of all cash inflows and outflows from the portfolio. This measure accounts for the timing and magnitude of cash flows, making it sensitive to when investors add or withdraw money from the portfolio.

Key points:

1. Money-weighted return = IRR of all cash flows (deposits, withdrawals, and ending value)
2. Time-weighted return = Geometric mean of period returns, unaffected by cash flow timing
3. Net present value = Present value of cash inflows minus present value of cash outflows at a given discount rate

The explanation provided in the text confirms: "The money-weighted return is the internal rate of return on a portfolio that equates the present value of inflows and outflows over a period of time."

Reference: Module 1.2, LOS 1.c