Problem: 1 Calculate Standard Deviation for S&P 500 and the four funds listed : 40 points
Problem: 2 Calculate Beta for the four funds 40 points
PROVIDE EXCEL FILE
| Percent (%) changes in values in years 2003 through 2012 | Fund-1 | Fund-2 | Fund-3 | Fund-4 | ||
| year | S&P index | small cap stock fund | Large cap Bond fund | Large cap stock fund | Hybrid Fund : Includes Both stocks and bonds | |
| 1 | 2003 | 28.39 | 46.44 | 3.72 | 30.26 | 10.77 |
| 2 | 2004 | 8.75 | 15.82 | 1.6 | 13.7 | 6.01 |
| 3 | 2005 | 3.06 | 3.15 | -3.39 | 6.37 | 3.23 |
| 4 | 2006 | 13.64 | 16.82 | -0.96 | 14.1 | 7.93 |
| 5 | 2007 | 3.33 | -1.73 | -0.08 | -0.74 | 6.7 |
| 6 | 2008 | -37.89 | -34.08 | -5.57 | -34.79 | -10.53 |
| 7 | 2009 | 22.52 | 23.46 | 3.43 | 15.29 | 12.08 |
| 8 | 2010 | 12.93 | 25.3 | 4.11 | 13.82 | 9.22 |
| 9 | 2011 | -0.09 | -5.5 | 4.9 | 3.23 | 3.77 |
| 10 | 2012 | 12.5 | 18.04 | 5.96 | 19.12 | 6.54 |
| Problem 1 | Standard Dev | ? | ? | ? | ? | ? |
| Problem 2 | BETA | Base line | ? | ? | ? | ? |
Problem 3: For each scenario explain, based on the data above and risk parameters assessment (STD deviation and beta) which funds would you recommend and explain why? 40 points
- Jack would like to make on average 8 % return but is uncomfortable with major drops. Any drop over 15 % in one year makes him nervous.
- Jill is very nervous investor and even a 10 % drop makes her very uncomfortable.
- Jane is young and comfortable riding the market over next 30 years.
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