Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Question
Chapter 13, Problem 4FPE
Summary Introduction
To discuss: An ETF and the way it combines the characteristics of close and open-ended funds
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What are the advantages of evaluating fund performance based on Internal Rate of Return (IRR)? Why would an investor prefer to evaluate a fund based on a cash-on-cash return?
Use the following to answer questions a. – f.
a. What is the alpha for Fund B?
b. Based on alpha, which fund displays superior performance?
c. What is the Sharpe ratio for Fund B?
d. Based on the Sharpe ratio, which fund displays superior performance?
e. Suppose you are an investment counselor with a new client, Jonsey, and that Funds A and B are the only options available in Jonsey's company sponsored retirement account. Jonsey has no other investments. Which fund would you recommend, and why?
f. What additional evidence would make you more confident in your recommendation, that is, more confident that the fund you recommend has the ability to perform in the future? (Hint: The answer has nothing to do with the Treynor Index.)
What is a benchmark and why is there a need to compare the fund's return vis-a-vis a benchmark?
Chapter 13 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
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Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning