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: Cengage Learning
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Chapter 13, Problem 5FPE
Summary Introduction
To describe: The funds that are less risky from the given pairs.
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Using Yahoo Finance, find two different mutual funds (such as a growth fund, a growth and income fund, a sector fund, or a bond fund). Compare the funds based on their size, management, risk level, and dividend distributions. Then, determine which of the two funds would be more appropriate.
You wish to evaluate which of the two equity funds delivered a better risk adjusted return in terms of Sharpe ratio with the risk free rate currently at 1.58%
UIT Fund Fund Return Standard Deviation
Equity Fund A 8.60% 20.12%
Equity Fund B 8.91% 18.12%
Calculate the Sharpe ratios for both equity funds A and B and state which fund had superior risk-adjusted performance during this period, as measured by the Sharpe ratio
Which of the following best describes an index mutual fund?
Mutual fund manager based on preset ratio of stocks and bonds.
Mutual fund manage based on a person's anticipated year of retirement.
Passively managed fund design to mimic a specific market.
Mutual fund that attempts to earn rates of return that exceed the return of the market.
Chapter 13 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
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- If you desire to forecast performance of a mutual fund for next year, the best forecast will be given by the a. geometric average return b. neither geometric average return nor arithmetic average return c. arithmetic average return d. both geometric average return and arithmetic average return You buy and hold a S&P 500 index fund. You always reinvest your dividends earned on the fund. Which method provides the best measure of the actual average historical performance of the investments you have chosen? a. both geometric average return and arithmetic average return b. neither geometric average return nor arithmetic average return c. arithmetic average return d. geometric average returnarrow_forwardWhich one of the following fund types is likely to have the lowest annual expense ratio? a. Index funds b. Equity funds c. Bond funds d. Balanced funds e. Hybrid funds Clear my choicearrow_forward[The following information applies to the questions displayed below.] A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 16% 40% Bond fund (B) 10% 31% The correlation between the fund returns is 0.11. Required: What is the Sharpe ratio of the best feasible CAL?arrow_forward
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