In the chapter opener, you learned that Bill Miller's investment performance wasalternating between the very top and the very bottom of his profession. Whataspect of his investment strategy would lead you to expect that his performancemight exhibit greater volatility than that of other mutual funds? The followingtable shows the annual performance from 2009 to 2012 of Miller's Opportunityfund and the S&P 500 index.OpportunityYear2009201020112012S&P 500Fund Return76.0%16.6%-34.9%39.6%Return26.5%15.1%2.11%16.0%Calculate the average annual return of the Opportunity fund and the S&P 500.Which performed better over this period? If you had invested $1,000 in each in-vestment at the beginning of 2009, how much money would you have in eachinvestment at the end of 2012? Calculate the standard deviation of the Opportu-nity fund's return and those of the S&P 500. Which is more volatile?

The average annual return of the fund is the mean of the fund returns. We can determine the values…

Calculate the average annual return of the Opportunity fund and the S&P 500. Which performed better over this period? If you had invested $1,000 in each in- vestment at the beginning of 2009, how much money would you have in each investment at the end of 2012? Calculate the standard deviation of the Opportu- nity fund's return and those of the S&P 500. Which is more volatile?

Calculate the average annual return of the Opportunity fund and the S&P 500. Which performed better over this period? If you had invested $1,000 in each in- vestment at the beginning of 2009, how much money would you have in each investment at the end of 2012? Calculate the standard deviation of the Opportu- nity fund's return and those of the S&P 500. Which is more volatile?

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 5FPE

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