According to dollar cost averaging, a fixed amount of money is invested periodically in a portfolio. Consequently, more units of a financial asset are purchased when prices are low and fewer units are purchased when prices are high. Robert Dudek follows dollar cost averaging by making a monthly investment of $500 toward retirement. His monthly investment is divided equally among two T. Rowe Price mutual funds: Equity Income and Short-term Bond funds. The following table represents the monthly adjusted closing price of the funds in 2009.

a. Compute and interpret the Laspeyres price index.
b. Compute and interpret the Paasche price index.
c. Why are the results of the two indices different?

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Eqinc Bond 18.40 4.72 Month January4.774.47July February2.934.49 August 19.45 4.75 March 14.14 4.53 September 19.92 4.78 Agoril May June Eqlnc Bond Month 16.04 4.58 October 19.53 4.80 16.87 4.64 November 20.60 4.85 16.89 4.66 December 20.99 4.82