Jan 16-Witer 2018 PrinciplRunning an ndependent Sample N Nigel Beauty Pax world

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Jan 16-Witer 2018 PrinciplRunning an ndependent Sample N Nigel Beauty Pax world Baarond a hdly respected, so adrespond le m tiad hand of stocks bonds. Vangadualori in de anoh, h i.ngaded fun that ep e m set mimus star and bond market Can index fund). The moan and standard deviation of anualized percent retums are shown belom.The nned mean and standard denation are based on the years 1993 through 2002 (Source: Momingstar) Pax World Balanced: 10.05%; #-14.34% Vanguard Balanced index: x-8.62%; s-120 % (a) Compute th ceofoere of vanation for each had (Enter your answers to the nea est wees) Vanguard cV 14 f represents return and s represents risk, then explan why the coofficent of variation can be takon to represent risk pr unt of return. From thes poent of view, ehich und as ob er? Explain O Since the CVis als? we can say that the CVropresents the risk por unit of retun; the Pax fund aspears to be better because the CVis Stee the CVis sne we can say that the cv represorts the nak per unt of return; the vanguardand appears to be better because the CV's smBK 0 Snce the CV s/x we can say that the CV esents the nuk perunt of return; the Pax had appears to bo better because the cv6 ® Since the CV is sli we can say that the CV represents the risk per unit of retuarn the anuard fund appears to be better because the y s imalox O Seve the CV is si we can say that the CV represents the nsk per unt of rebum; nather fund a better because the CV's are equal O snce the cv= w2wo can say that the cv represents the nsk per int ofreume nether und s Mter name then, re suit bett (bo compute a 73% aebyshev urterval around the mean for each tn.Ereer your Pax Vanguard Upper Lim Use the intervals to compare the two funds As uual, 0 vanguard has a-range of returns, with less vanguard has a narrower 'ange of retums.d.ee ut pertfomud future O Typie here DOLL

Explanation / Answer

CV=s/x*100

PAX=14.34/10.05*100= 142.686567164179

Vanguard=12.03/8.62*100= 139.559165

Since the cv is s/x we can say that cv represents the risk per unit of return; the Vanguard fund appears to be better because CV is smaller (fourth option)

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