webassignnet ld Balanced is a highly respected, sodially responsible mutual fund
ID: 3039876 • Letter: W
Question
webassignnet ld Balanced is a highly respected, sodially responsible mutual fund of stocks and bonds. Vanguard Balanced Index is another highly regarded fund that represents the S. stock and bond market (an index fund). The mean and standard deviation of annualized percent returns are shown below. The annualized mean and standard n are based on the years 1993 through 2002 (Source: Morningstar). Pax World Balanced:--9.52%; s = 14.01% Vanguard Balanced Index: x-8.76%; s-12.32% (a) Compute the coeficient of variation for each fund. (Round your answers to one decimal place.) Pax Vanguard If x represents return and s represents risk, then explain why the coefficient of variation can be taken to represent risk per unit of return, From this point of view, which fund appears to be better? Explain. O Since the CV is s/s2 we can say that the CV represents the risk per unit of return; the Pax fund appears to be better because the CV is smaller O Since the CV is s/s2 we can say that the CV represents the risk per unit of return; the Vanguard fund appears to be better because the CV is smaller. O Since the CV is s/x we can say that the CV represents the risk per unit of return; the Pax fund appears to be better because the CV is smaller Since the CV is s/x we can say that the CV represents the risk per unit of return; the Vanguard fund appears to be better because the CV is smaller O Since the CV is s/x we can say that the CV represents the risk per unit of return, neither fund is better because the O Since the CV, is s CVs are equal. because the CVs are equal. /s2 we can say that the CV represents the risk per unit of return; nether fund is better (b) Compute a 75% Chebyshev interval around the mean for each fund. (Enter your answers to 2 decimal places.) Pax Vanguard Lower Limit Upper Limit Use the intervals to compare the two funds. As usual, past performance does not guarantee future performance. Vanguard has a wider range of returns, with less downside, but also less upside. Vanguard hasa narrower range of returns, with more downside, but also more upside. Vanguard has a narrower range of returns, with less downside, but also less upside. Vanguard has a wider range of returns, with more downsice, but also more upside. MacBook ProExplanation / Answer
a) as we know Coefficient of variation=(std deviation/mean)*100
for Pax CV =(14.01/9.52)*100 =147.2%
for Vanguard CV = (12.32/8.76)*100=140.6%
4th option is correct ; since the CV is x/xbar................Vanguard func appears to be better,,,,,,
b) for Chebychev ; 75% values fall 2 std deviation from mean;
hence
Vanguard has narrower range......with less downside but also less upside
pax Vanguard lower limit -18.5 -15.88 upper limit 37.54 33.4Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.