Project_2_Spring_08_Final_Report_Section_1_Team_2_Graded KB_JP

Project_2_Spring_08_Final_Report_Section_1_Team_2_Graded KB_JP

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Unformatted text preview: MONEY MAKING, CORP. 2001-2005 Risk and Return Analysis of Mutual Funds Including recommendations to investors Section 1 Team 2 Brooke Begay blb87 Garrett S. Mehlberg gsm27 Jason Rheinfelder jcr62 Jessica Young- jmy39 Kyle Limberg kll98 Logan Leonard ljl54 Scott Weymiller sw237 Jenn Rollins jr433 (nonparticipant) Revised April 22, 2008 1 Executive Summary (Times New Roman, 12 Font) This report was created by a group of analysts at MoneyMaking Corporation who specialize in mutual fund investment. The purpose of this report is to make general fund recommendations to three different investor types based on the risk and return behavior of several broad classifications of funds. The analysis is based on annualized return data for 838 mutual funds over 3 overlapping periods. The sample also includes other factors, such as the absence or presence of sales fees, degree of capitalization, and whether the fund has an objective of sustained value or growth. Descriptive statistics drawn from this data have been used to generate specific recommendations for risk averse, risk neutral, and risk seeking investors. Risk averse investors require the lowest degree of risk per expected return, risk seeking investors require the highest degree of risk per expected return, and risk neutral investors judge investments by maximal return without reference to risk. These recommendations include small capitalization funds with a value goal for a risk averse investor, because this will provide ample returns with a high degree of stability for the investor. Conversely, a recommendation for a risk seeking investor would mainly focus on large capitalization funds with growth objectives, because this type of mutual fund provides the investor with the highest risk and greatest opportunity for a high return of up to 42.3 percent. These recommendations then underwent hypothesis testing to ascertain their veracity, which showed significant evidence that small cap funds yield larger returns than large cap funds (probability of falsely rejecting a true claim of no difference was a microscopic 1.63x10-86 ), but that funds with a growth objective do not really yield higher average returns than ones with a value objective. 1 2001-2005 Risk and Return Analysis of Mutual Funds Description of the Problem The problem which the analysts at MoneyMaking Corp. face is that of organizing and reviewing data, gathering descriptive statistics, and generating meaningful and pertinent assessments based on inferential statistics, to allow an individual or firm to make competent decisions regarding mutual fund investment. The focus of the problem is on discovering which types of mutual funds are best suited to a given investors strategy....
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This note was uploaded on 04/30/2008 for the course NOT 001 taught by Professor Notaprofessor during the Spring '08 term at N. Arizona.

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Project_2_Spring_08_Final_Report_Section_1_Team_2_Graded KB_JP

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