Sarah and Gabe are interested in investing more heavily in growth mutual funds. They are particularly interested in the Super Big Fund in the large-cap category. They have asked, based on the performance data in the information that you have received, what the probability is for the Super Big Fund experiencing a return of less than -5% in any given year? Show your work*.

RoR= 13%

SD= 18.00%

market correlation = 0.95

Yield= 2.00%

 

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Approved Equity & Commodity Mutual Funds Fund Fund Objective ROR* SD Market Correlation (r) Yield Super Big Fund Large-cap fund 13.00% 18.00% 0.95 2.00% Maxi Fund Large-cap fund 12.20% 17.40% 0.92 2.00% Multivariate Fund Mid-cap fund 14.00% 18.30 % 0.90 1.00% Germain Fund Mid-cap fund 13.30% 16.90% 0.89 1.25% Efficacy Fund Small-cap fund 11.00% 19.00% 0.85 0.25% Software Fund Small-cap fund 12.00% 21.00% 0.70 0.00% Clinical Fund International fund 10.00% 13.00% 0.68 2.00% Image Fund Measures Fund International fund 9.80% 11.00% 0.63 1.00% Precious metals 6.00% 13.00% 0.40 fund 0.50% Thumb Fund Real estate fund 11.00% 11.00% 0.99 4.00% Approved Equity & Commodity Mutual Funds Fund Fund Objective ROR* SD Market Correlation (r) Yield Super Big Fund Large-cap fund 13.00% 18.00% 0.95 2.00% Maxi Fund Large-cap fund 12.20% 17.40% 0.92 2.00% Multivariate Fund Mid-cap fund 14.00% 18.30 % 0.90 1.00% Germain Fund Mid-cap fund 13.30% 16.90% 0.89 1.25% Efficacy Fund Small-cap fund 11.00% 19.00% 0.85 0.25% Software Fund Small-cap fund 12.00% 21.00% 0.70 0.00% Clinical Fund International fund 10.00% 13.00% 0.68 2.00% Image Fund Measures Fund International fund 9.80% 11.00% 0.63 1.00% Precious metals 6.00% 13.00% 0.40 fund 0.50% Thumb Fund Real estate fund 11.00% 11.00% 0.99 4.00%

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