5. You are trying to sell a mutual fund to a customer, who can tolerate losing more than 10% of assets during a bad year if that happened only once every twenty years. If the expected annual return of the fund you are selling is 8% and the daily volatility is 0.72%, explain briefly how likely is it that the customer would buy the fund. Assume that there are 255 trading days in a year.

5. You are trying to sell a mutual fund to a customer, who can tolerate losing more than 10% of assets during a bad year if that happened only once every twenty years. If the expected annual return of the fund you are selling is 8% and the daily volatility is 0.72%, explain briefly how likely is it that the customer would buy the fund. Assume that there are 255 trading days in a year.

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

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 7FPE

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