Pax World Balanced is a highly respected, socially responsible
mutual fund of stocks and bonds. Vanguard Balanced Index is another
highly regarded fund that represents the entire U.S. stock and bond
market (an index fund). The mean and standard deviation of
annualized percent returns are shown below. The annualized mean and
standard deviation are for a recent 10-years period.†. Pax World
Balanced: x = 9.43%; s = 14.28% Vanguard Balanced Index: x = 9.00%;
s = 12.80% (a) Compute the coefficient of variation for each fund.
(Round your answers to one decimal place.) Pax Vanguard CV 151.43 %
142.22 % If x represents return and s represents risk, then explain
why the coefficient of variation can be taken to represent risk per
unit of return. From this point of view, which fund appears to be
better? Explain. Since the CV is s/s2 we can say that the CV
represents the risk per unit of return; the Pax fund appears to be
better because the CV is smaller. Since the CV is s/s2 we can say
that the CV represents the risk per unit of return; the Vanguard
fund appears to be better because the CV is smaller. Since the CV
is s/x we can say that the CV represents the risk per unit of
return; the Pax fund appears to be better because the CV is
smaller. Since the CV is s/x we can say that the CV represents the
risk per unit of return; the Vanguard fund appears to be better
because the CV is smaller. Since the CV is s/x we can say that the
CV represents the risk per unit of return; neither fund is better
because the CV's are equal. Since the CV is s/s2 we can say that
the CV represents the risk per unit of return; neither fund is
better because the CV's are equal.
(b) Compute a 75% Chebyshev interval around the mean for each
fund. (Enter your answers to 2 decimal places.)
Vanguard Lower limit and Vanguard Upper limit?