Question
Suppose the rates of return (in %) over the past 6 years for two mutual funds are as follows: Year Fund A Fund B
Suppose the rates of return (in %) over the past 6 years for two mutual funds are as follows: Year Fund A Fund B 1 8.3 12 2 -6.0 -4.8 3 18.9 6.4 4 -5.7 10.2 5 23.6 25.3 6 20 1.4 a. Compute the mean and standard deviation of Fund A. b. Compute the mean and standard deviation of Fund B. c. Compute the coefficient of variation (CV), which is defined as the ratio of standard deviation over mean, and sometimes expressed in percentage (x100%), for Fund A and B. d. In practice, CV is often used as a measure of risk because it measures the variation of the returns relative to the mean return. Based on the computed CV in (c), which fund do you think has a higher investment risk?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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