Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds (see Viewpoint Socially Responsible Investing). Vanguard Balanced Index is another

Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds (see Viewpoint €œSocially Responsible Investing€). Vanguard Balanced Index is another highly regarded fund that represents the entire U.S. stock and bond market (an index fund). The mean and standard deviation of annualized percent returns are shown below. The annualized mean and standard deviation are based on the years 1993€“ 2002 (Source: Morningstar).

(a) Compute the coefficient of variation for each fund. If x represents return and s represents risk, then explain why the coefficient of variation can be taken to represent risk per unit of return. From this point of view, which fund appears to be better? Explain.
(b) Compute a 75% Chebyshev interval around the mean for each fund. Use the intervals to compare the two funds. As usual, past performance does not guarantee future performance.