Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 8, Problem 22PS
Summary Introduction
To discuss: Assess the performance of fund during the period of 1999 and 2008.
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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.
2
3
4
Fund
-1.5
+24.1 +42.0 +11.0
+0.5
Market index
-0.6
+17.0 +31.5
+10.0
-0.4
a. Calculate (a) the average return on both the Fund and the index, and (b) the standard deviation of the returns on each. (Do not
round intermediate calculations. Round your answers to 2 decimal places.)
b. Did Ms. Sauros do better or worse than the market index on these measures?
Mesozoic Fund Market Portfolio
Return
Return
Average return
а.
Standard deviation
Did Ms. Sauros do better or worse than the
b.
market index on these measures?
The China Fund is a mutual fund that can be purchased on the New York Stock Exchange. The rates of total return provided by the fund for each year 2004 - 2008 were -17.75%, 18.75%, 11.25%, 12.5% and 5%. If your investment is worth $3, 626.67 at the end of 2008, what was your investment value at the beginning of 2004? For full marks your answer(s) should be rounded to the nearest cent
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.
Fund
Market index
a.
1
-1.2
-0.9
b.
2
+24.8
+16.0
a. Calculate (a) the average return on both the Fund and the index, and (b) the standard deviation of the returns on each. (Do not
round intermediate calculations. Round your answers to 2 decimal places.)
b. Did Ms. Sauros do better or worse than the market index on these measures?
Average return
Standard deviation
Did Ms. Sauros do better or worse than
the market index on these measures?
3
+40.7
+31.7
Mesozoic
Fund Return
Better
4
+11.1
+10.9
15.06
16.04
Market
Portfolio
Return
5
+0.3
-0.7
10.70
11.76
Chapter 8 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 8 - Portfolio risk and return Here are returns and...Ch. 8 - Efficient portfolios For each of the following...Ch. 8 - Sharpe ratio Use the long-term data on security...Ch. 8 - Efficient portfolios Figure 8.11 purports to show...Ch. 8 - CAPM Suppose that the Treasury bill rate is 6%...Ch. 8 - CAPM True or false? a. The CAPM implies that if...Ch. 8 - APT Consider a three-factor APT model. The factors...Ch. 8 - CAPM True or false? Explain or qualify as...Ch. 8 - Portfolio risk and return Look back at the...Ch. 8 - Portfolio risk and return Mark Harrywitz proposes...
Ch. 8 - Portfolio risk and return Ebenezer Scrooge has...Ch. 8 - Portfolio beta Refer to Table 7.5. a. What is the...Ch. 8 - CAPM The Treasury bill rate is 4%, and the...Ch. 8 - Portfolio risk and return Percival Hygiene has IO...Ch. 8 - Cost of capital Epsilon Corp. is evaluating an...Ch. 8 - Prob. 18PSCh. 8 - APT Consider the following simplified APT model:...Ch. 8 - Prob. 20PSCh. 8 - Prob. 21PSCh. 8 - Prob. 22PSCh. 8 - Prob. 23PSCh. 8 - Efficient portfolios Look again at the set of the...
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Similar questions
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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. Fund Market index -1.2 -0.9 2 +24.8 +16.0 a. Average retur a. Standard deviation b. Did Ms. Sauros do better or worse than the market index on these measures? 3 +40.7 +31.7 a. Calculate (a) the average return on both the Fund and the index, and (b) the standard deviation of the returns on each. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. b. Did Ms. Sauros do better or worse than the market index on these measures? Answer is complete but not entirely correct. Mesozoic Fund Return Better +11.1 +10.9 19.23 15.14 x Market Portfolio Return 19.53 +0.3 -0.7 8.85 xarrow_forward"The following table gives the rate of return for a certain mutual fund from 2010 to 2014: Year Rate of Return 2010 -5.9% 2011 11.4% 2012 1.4% 2013 12.7% 2014 6.5% Compute the overall rate of return during this period. Round your answer to the nearest tenth of a percent."arrow_forwardJ.P. Morgan Asset Management publishes information about financial investments. Overthe past 10 years, the expected return for the S&P 500 was 5.04% with a standard deviation of 19.45% and the expected return over that same period for a core bonds fund was5.78% with a standard deviation of 2.13% (J.P. Morgan asset Management, guide to theMarkets, 1st quarter, 2012). The publication also reported that the correlation betweenthe S&P 500 and core bonds is −.32. You are considering portfolio investments that arecomposed of an S&P 500 index fund and a core bonds fund.a. Using the information provided, determine the covariance between the S&P 500 andcore bonds.b. Construct a portfolio that is 50% invested in an S&P 500 index fund and 50% in a corebonds fund. In percentage terms, what are the expected return and standard deviationfor such a portfolio?c. Construct a portfolio that is 20% invested in an S&P 500 index fund and 80% investedin a core bonds fund. In…arrow_forward
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