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Problem 1 ( 50 marks) At the beginning of 2019, Investors A, B and C invests their capital in Fund A, Fund B and Fund
Problem 1 ( 50 marks) At the beginning of 2019, Investors A, B and C invests their capital in Fund A, Fund B and Fund C for 1 year respectively. The following tables show the cashflows of these 3 fund accounts in 2019. Fund account A lowned bv investor Al Fund account B (owned bv investor B) Fund account C Inwed hv investor C I (*Note: If the amount is negative, it corresponds to the case of "withdrawal". For example, "300 " means that the investor withdraws $300 from the account.) You are given that the dollar-weighted rate of return of fund account A is 3.7736%. Questions: (a) Using suitable performance indicator (time-weighted rate of return or dollar-weighted rate of return) introduced in Topic 5, determine which investor's investment strategy has the best performance? Explain your answer. (b) Today is 1st January, 2020, investor D wishes to invest his capital into one of the three funds above. Suppose that the investor chooses the investment fund which has the best performance in 2019. Which investment fund should he choose? Explain your answer using suitable performance indicator introduced in Topic 5 . (*Note: You need to briefly explain the choice of performance indicator (time-weighted rate of return or dollar-weighted rate of return) chosen)
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