03 - 32 Instructional Tips and Solutions for Web Cases...

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32 Instructional Tips and Solutions for Web Cases Instructional Tips and Solutions for Web Cases Chapter 2 Instructional Tips 1. Students should develop a frequency distribution of the More Winners data along with at least one graph such as a histogram, polygon, or cumulative percentage polygon. 2. One objective is to have students look beyond the actual statistical results generated to evaluate the claims presented in the Web page. For the More Winners data, this might include a comparison with tables and charts developed for the entire FUNDS2002 data set. Such a comparison would lead to the realization that all eight funds in the “Big Eight” are high-risk funds that may have a great deal of variation in their return. 3. The presentation of information can lead to different perceptions of a business. This can be seen in the aggressive approach taken in the home page. Solutions 1. Yes. There is a certain cheapness to the graphical design of the home page and a certain aggressiveness in exclamations to “show me the data.” Claims are made, but supporting evidence is scant. The style is reminiscent of misleading consumer print ads such as ones that promise a “genuine” diamond for only $5. The graph of “more winners” on a subsequent Web page has a chartjunk background and Y -axis gridlines. Also, nowhere on the Web site does StockTout disclose its principals and the address of its operations, something that a reputable business would surely do.
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33 Instructional Tips and Solutions for Web Cases 2. Frequencies (Return(%)) Bins Frequency Percentage Cumulative % Midpts -50 0 0.00% .00% --- -40 1 3.45% 3.45% -45 -30 3 10.34% 13.79% -35 -20 4 13.79% 27.59% -25 -10 2 6.90% 34.48% -15 -0.01 1 3.45% 37.93% -5 9.99 9 31.03% 68.97% 5 20 3 10.34% 79.31% 15 30 2 6.90% 86.21% 25 40 3 10.34% 96.55% 35 50 1 3.45% 100.00% 45 Although the claim is literally true, the data show a wide range of returns for the 29 mutual funds selected by Stock Tout investors. Although 18 funds had positive returns, 11 had negative returns for the five year period. Of the funds having negative returns, many had large losses, with 27.59% having annualized losses of 20% or more. Many of the positive returns were small, with 31.03% having an annualized return between 0 and 10%. All of this raises questions about the effectiveness of the Stock Tout investment service.
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Instructional Tips and Solutions for Web Cases 3. Since mutual funds are rated by risk, it would be important to know the “risk” of the funds StockTout chooses. “High” risk funds, as all eight turn out to be, are not a wise choice for certain types of investors. An in-depth analysis would also see if the eight funds were representative of the performance of that group (no, the eight are among the weakest performers, as it turns out). In addition, examining summary measures (discussed in Chapter 3) would also be helpful in evaluating the “Big Eight” funds.
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