1.Estimate the average daily return of each fund using the arithmetic average method. (EXCEL) 2. Calculate the standard deviation of each fund (EXCEL) 3. Calculate the correlation between the two funds 4. Calculate the covariance between the two funds using a) Excel function, Covariance.S and b) using formula (Correlation multiplied by standard deviations of both funds.

1.Estimate the average daily return of each fund using the arithmetic average method. (EXCEL) 2. Calculate the standard deviation of each fund (EXCEL) 3. Calculate the correlation between the two funds 4. Calculate the covariance between the two funds using a) Excel function, Covariance.S and b) using formula (Correlation multiplied by standard deviations of both funds.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 2FPE

See similar textbooks

Related questions

Q: Which of the following is not an advantage of the average rate of return method? a.includes the…

A: Average rate of return is a method of calculating return on the asset

Q: what is the Fraction of the total value? I do not understand how do you get the number that divides…

A: That's a formula error (b3/5153 is not correct) when pasting formulas Correct one is Fraction of…

Q: Which ones identify the disadvantages of the payback rule? A. Very simple and easy to apply. B.…

A: Solution: Payback period is one of the decision making criteria in capital budgeting. It measures…

Q: #7 For context NPV is net present value, IRR is internal rate of return, and ARR is accounting rate…

A: The chart you're referring to is likely a financial analysis chart used in capital budgeting. It…

Q: Why is the acid test ratio a more rigorous test of short-term solvency than the current ratio? A.…

A: The ratio refers to the establishment of a relation between the two numbers. In accounting, the…

Q: Describe three strategies that could be used to reduce the total interest paid.

A: The capital is the backbone of the company, and the company will be willing to raise the capital for…

Q: To find the present value of an uneven series of cash flows, you must find the PVs of the individual…

A: The present value refers to that value which is the current value and by which the future value of…

Q: What is a “required rate of return”? Why is it called the “cost ofmoney” or the “price of money”?

A: The required rate of return can be calculated by two methods, 1) Gordan's growth model Gordan's…

Q: liquidity

A: Savings plans is the process of saving enough money for a specific purpose or for an important goal…

Question

this is a finance question. the arithmetic average is not going to be the total sum divided by n ( ex:2546/8) if you can't answer it, please just reject the question

Black Water CO(BWO)
TATA Steel (TATA)
1.Estimate the average daily return of each fund using the arithmetic average method. (EXCEL)
Below are the historical closing prices for the two funds above.
2. Calculate the standard deviation of each fund (EXCEL)
Date
BWO
TATA
3. Calculate the correlation between the two funds
10/20/2016 113.3374 113.6971
4. Calculate the covariance between the two funds using a) Excel function, Covariance.S
10/21/2016 113.7611 113.6408
and b) using formula (Correlation multiplied by standard deviations of both funds.
10/24/2016 115.1283 114.3635
10/25/2016 114.7624 113.5094
10/26/2016 113.9825
112.383
10/27/2016 113.4626 111.0971
10/28/2016 112.7501 110.7873
10/31/2016 112.6442 111.2285
11/1/2016 111.7969 109.8675
11/2/2016 110.9014 108.4689
11/3/2016 109.8134 107.9433
11/4/2016 109.4282 108.6379
11/7/2016 112.0279 111.2942
11/8/2016 112.7597 111.5852
11/9/2016 113.2797 115.0206
11/10/2016 111.4502 116.8603
11/11/2016 111.4984 119.5448

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

a. Using the data in the table below and calculate the following performance measures
Help answering this question
The days to maturity for a sample of five money market funds are shown here. The dollar amounts invested in the funds are provided. Days to Maturity Dollar Value ($ millions) 17 15 13 6 5 4 10 25 15 10 Use the weighted mean to determine the mean number of days to maturity for dollars invested in these five money market funds. Round your answer to 2 decimal places. x = days
The average return, standard deviation, and beta for Fund A is given below along with data for the S&P 500 Index. Fund Average Return Standard Deviation Beta A 14% 28.5% 1.7 S&P 500 17.6% 19.4% 1 Risk-free 4.8% Calculate the Treynor measure of performance for Fund A. Convert percentages to decimal places before calculating your answer. ENTER your answer using FOUR DECIMAL places. Example: 0.1234
The days to maturity for a sample of five money market funds are shown here. The dollar amounts invested in the funds are provided. Days to Dollar Value Maturity ($ millions) 20 20 11 20 8 20 7 10 6. 15 Use the weighted mean to determine the mean number of days to maturity for dollars invested in these five money market funds. Round your answer to 2 decimal places. days
questions to be answered
Can you please solve this financial accounting issue?
(10 POINTS) Consider the following funds whose expected returns and volatilities are given in the following table: \table [[Type of fund, Er,, o,, management fee (f) 5. (10 POINTS) Consider the following funds whose expected returns and volatilities are given in the following table: Type of fund Bio tech fund (B) Er σi management fee (f) .40 .60 .04 Critical minerals fund (C) .26 .40 .03 Market portfolio (M) .18 .24 0 where the management fee (f) is the percentage fee for holding the fund. The risk-free rate is 0.04.Is this situation compatible with the CAPM? Justify your answer.
Review the table below listing performance metrics for selected assets. The metrics are defined in the same way as in CAPM. Compute the CAPM alpha for the four assets (data attached as image).
You are given the following information for two funds A and B, relating to their performance over the last five years. A B Market Risk-free Investment Cumulative Total Return Covariance of Standard deviation Return over 5 Years of Return with Market 76.20% 0.22 0.044 101.10% 0.32 0.075 92.50% 0.25 40.30% Calculate the Treynor, Sharpe and Jensen performance measures for Funds A and B. What do they tell you about the performance of the funds?
The following data is reported for a fund and an appropriate benchmark as well as the risk-free rate each year: Benchmark Return 19% 20% 22% 23% 22% 22% 18% 16% 13% 12% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Required A Fund Return Required: a. What is the Sharpe ratio for the fund and the benchmark? b. What is the Treynor ratio for the fund and the benchmark? c. What is the fund tracking error? d. What is the beta for the fund? e. What is Jensen's alpha for the fund? 22% 23% 25% 28% 28% 29% 20% 18% 15% 13% Complete this question by entering your answers in the tabs below. Fund Benchmark Required B Risk-free rate 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% Required C Sharpe Ratio What is the Sharpe ratio for the fund and the benchmark? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Required D Required E
For an investment account, you are given the following information during calendar years 2014 and 2015 Date Fund Value Helore Activity Deposit Withderwal Jamuary 1, 2014 160 March 1.2014 175 15 une 1, 2014 170 October 1, 2014 175 December 31, 2014 Date Pund Value Before Activity Deposit Withdrawal Pamuary 1, 2015 September 1, 201S 203 10 December 31, 2015 During 2014, the dollar weighted rate of retuni equla 74. During 2015, the time-weighted rate of retum equals 10%. Delermine the value of the fund at the end of 2015, P A n A 21095 a 212.75 e 21365 D21575 E 217.45