Math Problem Statement
During the past 10 years, the percent returns on two mutual funds (aggressive and passive) expressed in percentages were as follows:
Year Aggressive Fund Passive Fund -10 0% 4% -9 7% 4% -8 0% 4% -7 1% 2% -6 7% 2% -5 2% 3% -4 7% 2% -3 2% 3% -2 1% 3% Last Year 6% 2%
Note that this is a sample of returns.
a) Compute the expected return for the two funds. Round your answers to two decimal places.
Aggressive =
Passive =
b) Compute the variance and standard deviation of the returns of the two funds. Round your answers to two decimal places.
Variance:
Aggressive =
Passive =
Standard Deviation: Aggressive = % Passive = %
Solution
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Math Problem Analysis
Mathematical Concepts
Expected Return
Variance
Standard Deviation
Statistical Analysis
Formulas
Expected Return: E[R] = (1/n) * Σ(Ri)
Variance: Var(R) = (1/n) * Σ(Ri - E[R])^2
Standard Deviation: σ = √Var(R)
Theorems
Law of Large Numbers
Central Limit Theorem
Suitable Grade Level
College Level (Statistics/Finance)
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