Question
The table below presents performance data for two mutual funds over the last 5 years -- the Socially Responsible Fund, and the Diamonds Are Forever
The table below presents performance data for two mutual funds over the last 5 years -- the Socially Responsible Fund, and the Diamonds Are Forever Resource Fund. The table also includes information on the returns of the market index and T-Bills over the same period. Use this information to answer the question that follows.
Return | Standard Deviation | Beta |
| |
Responsible | 11.6% | 36% | 1.7 | |
Diamonds | 11% | 32.60% | 2.5 | |
Market | 5.5% | 17% | 1 | |
T-Bills | 1% | N/A | N/A |
If you had invested in the market portfolio and T-Bills in such a way as to match the beta of Diamonds Are Forever, then what return would you have earned?
Please show your work.
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