Investors commonly use the standard deviation

Assignment Help Business Economics

Reference no: EM13733396

Investors commonly use the standard deviation of the monthly percentage return for a mutual fund as a measure of the risk for the fund; in such cases, a fund that has a larger standard deviation is considered more risky than a fund with a lower standard deviation. The standard deviation for the American Century Equity Growth fund and the standard deviation for the Fidelity Growth Discovery fund were recently reported to be 15.0% and 18.9%, respectively (The Top Mutual Funds, AAII, 2009). Assume that each of these standard deviations is based on a sample of 60 months of returns. Do the sample results support the conclusion that the Fidelity fund has a larger population variance than the American Century fund? Which fund is more risky?

Reference no: EM13733396

Questions Cloud

Decision whether to buy new press machine : When considering the decision whether to buy a new press machine for your publishing house, which of the following costs will you NOT consider?

Duty of parties to meet and negotiate at reasonable times : Good-faith bargaining generally refers to the duty of the parties to meet and negotiate at reasonable times with willingness to reach agreement on matters within the scope of representation; however, neither party is required to make a concession or ..

Hauled the other firms cargo on the return trip : Two manufacturing firm, located in cities 90 miles apart, both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day) and each firm has truck o..

Null and alternative versions of the research hypothesis : Most individuals are aware of the fact that the average annual repair cost for an automobile depends on the age of the automobile. A researcher is interested in finding out whether the variance of the annual repair costs also increases with the age o..

Investors commonly use the standard deviation : Investors commonly use the standard deviation of the monthly percentage return for a mutual fund as a measure of the risk for the fund; in such cases, a fund that has a larger standard deviation is considered more risky than a fund with a lower stand..

Cereal box fillings is exceeding the design specification : The filling variance for boxes of cereal is designed to be .02 or less. A sample of 41 boxes of cereal shows a sample standard deviation of .16 ounces. Use ? = .05 to determine whether the variance in the cereal box fillings is exceeding the design s..

Whether population variance specification is being violated : An automotive part must be machined to close tolerances to be acceptable to customers. Production specifications call for a maximum variance in the lengths of the parts of .0004. Suppose the sample variance for 30 parts turns out to be s² = .0005. Us..

Determine the present worth of equal annual deposits : Determine the present worth of 5 equal annual deposits of $1,150 at the end of years 1 through 5, followed by 4 equal annual withdrawals of $700 at the end of years 4 through 7. Note that both years 4 and 5 will have a deposit and a withdrawal. Inter..

Decide to withdraw the entire amount remaining : You put $20,000 on deposit on your 30th birthday at 5% compounded annually. On your 40th birthday, the account begins earning 6%. Then on your 50th birthday, it begins earning 7%. You plan to withdraw equal annual amounts on your 61st, 62nd, . . . , ..

User Account

All Pages