The Magellan mutual fund has beaten the Standard andPoor’s 500 during 11 of the last 13 years. People use this asan argument that you can “beat the market.” Here’s anotherway to look at it that shows that Magellan’s beating themarket 11 out of 13 times is not unusual. Consider 50 mutualfunds, each of which has a 50% chance of beating the marketduring a given year. Use simulation to estimate theprobability that over a 13-year period the “best” of the 50mutual funds will beat the market for at least 11 out of 13years. This probability turns out to exceed 40%, whichmeans that the best mutual fund’s beating the market 11 outof 13 years is not an unusual occurrence!
The Magellan mutual fund has beaten the Standard andPoor’s 500 during 11 of the last 13 years. People use this asan argument that you can “beat the market.” Here’s anotherway to look at it that shows that Magellan’s beating themarket 11 out of 13 times is not unusual. Consider 50 mutualfunds, each of which has a 50% chance of beating the marketduring a given year. Use simulation to estimate theprobability that over a 13-year period the “best” of the 50mutual funds will beat the market for at least 11 out of 13years. This probability turns out to exceed 40%, whichmeans that the best mutual fund’s beating the market 11 outof 13 years is not an unusual occurrence!
Database System Concepts
7th Edition
ISBN:9780078022159
Author:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Publisher:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Chapter1: Introduction
Section: Chapter Questions
Problem 1PE
Related questions
Question
The Magellan mutual fund has beaten the Standard andPoor’s 500 during 11 of the last 13 years. People use this asan argument that you can “beat the market.” Here’s anotherway to look at it that shows that Magellan’s beating themarket 11 out of 13 times is not unusual. Consider 50 mutualfunds, each of which has a 50% chance of beating the marketduring a given year. Use simulation to estimate theprobability that over a 13-year period the “best” of the 50mutual funds will beat the market for at least 11 out of 13years. This probability turns out to exceed 40%, whichmeans that the best mutual fund’s beating the market 11 outof 13 years is not an unusual occurrence!
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!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, computer-science and related others by exploring similar questions and additional content below.Recommended textbooks for you
Database System Concepts
Computer Science
ISBN:
9780078022159
Author:
Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Publisher:
McGraw-Hill Education
Starting Out with Python (4th Edition)
Computer Science
ISBN:
9780134444321
Author:
Tony Gaddis
Publisher:
PEARSON
Digital Fundamentals (11th Edition)
Computer Science
ISBN:
9780132737968
Author:
Thomas L. Floyd
Publisher:
PEARSON
Database System Concepts
Computer Science
ISBN:
9780078022159
Author:
Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Publisher:
McGraw-Hill Education
Starting Out with Python (4th Edition)
Computer Science
ISBN:
9780134444321
Author:
Tony Gaddis
Publisher:
PEARSON
Digital Fundamentals (11th Edition)
Computer Science
ISBN:
9780132737968
Author:
Thomas L. Floyd
Publisher:
PEARSON
C How to Program (8th Edition)
Computer Science
ISBN:
9780133976892
Author:
Paul J. Deitel, Harvey Deitel
Publisher:
PEARSON
Database Systems: Design, Implementation, & Manag…
Computer Science
ISBN:
9781337627900
Author:
Carlos Coronel, Steven Morris
Publisher:
Cengage Learning
Programmable Logic Controllers
Computer Science
ISBN:
9780073373843
Author:
Frank D. Petruzella
Publisher:
McGraw-Hill Education