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) Cash
Return with Changing Investments
What is the average monthly return of the following investment?
Month | Action (assuming occur at the end of the period) | Cash Flow |
0 | Buy one share @ $50 | |
1 | Buy another share @ $53 Stock pays $2 dividend per share | |
2 | Stock pays $2 dividend per share Sell all shares @ $54 |
|
1). Dollar Weighted Approach
2). Time Weighted Approach
Which one is minimizing the influence of the actions of investments (flows)?
Which one is a more appropriate measure of wealth change from the investors perspective?
can I have more calculation details or reasons? thanks!
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