Exercise 3

Exercise 3 - XYZ funds will lose $5000 in the event of a...

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Exercise 3 – Expected Value, Standard Deviation and CV Your dad has given you $10,000 which you want to invest in a mutual fund for a year. There are two mutual funds that you consider. ABC funds will lose $3000 if there is an economic downturn in the next year while it will gain $2000 if there is economic growth in the next year. Probability of an economic downturn next year is 0.20 and the probability of an economic growth is 0.80.
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Unformatted text preview: XYZ funds will lose $5000 in the event of a downturn and will gain $2500 if there is economic growth in the next year. Which of the two investments will you choose? Calculate Expected value, Standard Deviation and Coefficient of Variation of the profit/loss to answer this question....
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This note was uploaded on 02/13/2012 for the course ECON 423 taught by Professor Vd during the Spring '08 term at UNC.

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