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Nicholas Grammas is an investment analyst examining the performance of two mutual funds with Janus Capital Group: the Janus Balanced Fund and the...

4. Nicholas Grammas is an investment analyst examining the performance of two mutual funds with Janus Capital Group: the Janus Balanced Fund and the Janus Overseas Fund.

·        The Janus Balanced Fund (JANBX): This "core" fund consists of stocks and bonds and its goal is diversification. It has historically produced solid long-term returns through different market cycles.

·        The Janus Overseas Fund (JAOSX): This fund invests in overseas companies based on their individual merits instead of their geography or industry sector.

The table in "Janus_Returns" of Chapter11.xlsx reports a portion of the annual returns (in percent) for these two funds from 2000-2016.

Questions:

In a report, use the above information to

a.   Describe the similarities and differences in these two funds' returns.

b.   Examine whether the risk of one fund is different from the risk of the other fund at the 5% significance level. Discuss the assumptions made for the analysis.


Year Balanced Overseas

2000 -2.16 -18.57

2001 -5.04 -23.11

2002 -6.56 -23.89

2003 13.74 36.79

2004 8.71 18.58

2005 7.75 32.39

2006 10.56 47.21

2007 10.15 27.76

2008 -15.22 -52.75

2009 24.28 78.12

2010 7.83 19.28

2011 1.44 -32.78

2012 13.07 12.42

2013 19.72 12.1

2014 8.46 -13.72

2015 0.60 -8.55

2016 4.51 -6.91

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