n a recent 5-year period, mutual fund manager Diana Sauros produced the following percentage rates of return for the Mesozoic fund. Rates of return on the market index are given for comparison Year Fund Return (%) Standard deviation mean Deviation 2 Market index return (%) Standard Deviation (Mean) Deviation2 1 -1.4 -16.52 272.91 -0.5 -11.8 139.24 2 24.0 8.88 77.44 16.0 4.7 22.09 3 41.9 26.78 717.17 31.4 20.1 404.01 4 10.9 -4.22 17.81 9.9 -1.4 1.96 5 0.2 -14.92
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- In a recent 5-year period, mutual fund manager Diana Sauros produced the following percentage
rates of return for the Mesozoic fund. Rates of return on the market index are given for comparison
|
Year |
Fund Return (%) |
Standard deviation mean |
Deviation 2 |
Market index return (%) |
Standard Deviation (Mean) |
Deviation2 |
|
1 |
-1.4 |
-16.52 |
272.91 |
-0.5 |
-11.8 |
139.24 |
|
2 |
24.0 |
8.88 |
77.44 |
16.0 |
4.7 |
22.09 |
|
3 |
41.9 |
26.78 |
717.17 |
31.4 |
20.1 |
404.01 |
|
4 |
10.9 |
-4.22 |
17.81 |
9.9 |
-1.4 |
1.96 |
|
5 |
0.2 |
-14.92 |
222.61 |
-0.3 |
-11.6 |
134.56 |
|
TOTAL |
75.6 |
1,307.94 56.5 |
|
701.86 |
||
|
AVERAGE |
15.12 |
261.59 11.3 |
|
140.37 |
||
|
SD |
|
16.17 |
|
11.85 |
Calculate
- The average return on Mesozoic Fund Return and Market Portfolio Return
Fund return = (-1.4+24+41.9+10.9+0.2)/5 = 15.12
Market index return = -0.5+16+31.4+9.9+ (-0.3)]/5 = 11.3
- The standard deviation of the returns on Mesozoic fund return and Market portfolio return
SD of the Fund = 16.17 and the market portfolio = 11.85
- Did Ms. Sauros do better or worse than the market index on these measures?
The fund provides a greater expected return of 16.17 compared to the market index 11.85 due to higher variance and standard deviation.
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