In a perfectly efficient market, an active strategy mutual fund that charges a 1% fee has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
In a perfectly efficient market, an active strategy mutual fund that charges a 1% fee has about a 47.4% chance of beating the index net of fee. In a universe of 5,000 funds, how many funds would you expect to beat the index all but once out of the past 10 years? In other words, the fund would fail to beat the benchmark in one of the 10 years. Enter answer accurate to two decimal places. In a perfectly efficient market, an active strategy mutual fund that charges a 1% fee has about a 47.4% chance of beating the index net of fee. In a universe of 5,000 funds, how many funds would you expect to beat the index all but once out of the past 10 years? In other words, the fund would fail to beat the benchmark in one of the 10 years. Enter answer accurate to two decimal places.
Expert Answer:
Answer rating: 100% (QA)
The probability that an active strategy mutual fund that charges a 1 fee bea... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
Students also viewed these finance questions
-
A slot machine has 3 slots. For each slot, the possible outcomes are an apple, orange, lemon, banana, melon, and a joker. When the player puts a coin in the machine, a wheel spins in each of the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
As CEO of your company, youve been going over your financial statements and have noticed something disturbing. You perform a horizontal analysis and find that sales have been increasing at a rate of...
-
Let x(n) be a sequence with z-transform with 0 x( n ) by using contour integration. 1- a (1 - a:(1 - a:-) X(:) = ROC: a < < 1/a
-
Briefly explain the way by which a firm would know if it needs new financing.
-
Donna Adams started an interior design company called Interiors by Donna, Inc., on September 1, 2010. The following amounts summarize the financial position of her business on September 14, 2010,...
-
Flanagan Company reports the following for the month of June. Instructions(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.(b) Which costing method...
-
What is the key problem in the case study Under Armour: Creating and Growing a New Consumer Brand. What are two solutions to the problems. What are advantages and disadvantages.
-
Laval produces lighting fixtures. Budgeted Information for Its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH). Overhead cost Direct labor...
-
Show that the pressure coefficient corresponding to a small deflection may be written, to second order, 0 + 2 (y+1) M-4(M-1) M-1 2 (M-1) Same result can be obtained from the oblique shock relations...
-
6 Athletic Performance Company (APC) was incorporated as a private company. The company's accounts included the following at July 1: Accounts Payable Buildings. Cash Common Stock $ 4,000 200,000...
-
Lucy has AGI of $125,000 before considering losses from some rental real estate she owns (she actively participates). She had the following losses from her rental property: Rental property 1 Rental...
-
1.1 Distinguish between four levels of strategy in business organisations with specific reference to the decision-making roles of managers. Next to each manager, provide an example of a decision that...
-
S = $1.60/ $ = 2% F= $1.54/E F = 4% Profits from covered interest arbitrage per unit of currency invested are closest to: O A 1.5692 OB. 0.0197 12 OC. $0.0197 OD. $1.5692
-
An Alaskan rescue plane traveling 35 m/s drops a package of emergency rations from a height of 142 m to a stranded party ofexplorers. The acceleration of gravity is 9.8 m/s 2 . Where does the package...
-
Now assume you want to start your own business at your home. You need to build your home computer network for your business. Address the following questions: Do you want to setup a firewall for your...
-
Integration is a vital concept when applied in one?s life. Integrating your life means making ideal choices. Perfect choices on the other go in line with quality decisions. Quality decisions lead to...
-
Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for Tokyo Rubber Company is 10 percent. a. Based on the payback period, which...
-
A technical analysis tool that is sometimes used to predict market movements is an investor sentiment index. AAII, the American Association of Individual Investors, publishes an investor sentiment...
-
The Biological Insect Control Corporation (BICC) has hired you as a consultant to evaluate the NPV of its proposed toad ranch. BICC plans to breed toads and sell them as ecologically desirable insect...
-
Preferred shares are least likely to have which of the following characteristics? a. Preference as to assets on liquidation of the corporation b. Extra liability for the preferred shareholders c. The...
-
The contributed capital portion of shareholders' equity does not include a. preferred shares. b. contributed surplus c. retained earnings. d. common shares.
-
Which of the following is true about stated value? a. It represents what a share is worth. b. It represents the original selling price for a share. c. It is established for a share after it is...
Study smarter with the SolutionInn App