You have a large sum of money that you want to invest in a mutual fund. Your friend recommends the fund "Coolio". However you heard hat investing in the fund could be sub par relative to investing on the CML.

The picture has historical returns of the "Coolio" fund as well as that of the SP500. Assume that for the period concerned the risk free rate is APR of 0.5% compounded monthly.

1) What is the monthly standard deviation of the fund and of the SP500

2) Find the CML portfolio that you wish to use as a benchmark for the fund (calculate the weights)

3) Find the historical returns of the benchmark portfolio that you calculated in part 2, using the picture

4) Suppose that you had 10K, invested on Jan 1 2016. Calculate the total amount you would have as of Nov 2017 if you decided to invest in "coolio", and if you decided to invest on the CML. Which portfolio is better?

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