Question: Return with Changing Investments
What is the average monthly return of the following investment?
|
Month
|
Action (assuming occur at the end of the period)
|
Fund return
|
|
0
|
Invest $100 to an equity index fund
|
N/A
|
|
1
|
Invest $30 to an equity index fund
|
2%
|
|
2
|
Withdraw $40 from the fund
|
3%
|
|
3
|
Receive $5 from the fund as dividend
|
-1%
|
|
4
|
Withdraw all investments from the fund
|
2%
|
1) Dollar Weighted Approach
2) Time Weighted Approach