Which of the two funds appears to have more eol

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Reference no: EM132041766

Use the Following information.

An investor wants to select one of the six mutual funds for the coming year. Data showing the percentage annual return for each fund during the five typical one year periods are shown here.

		State of Nature
	Year A	Year B	Year C	Year D	E
Mutual Fund	38.5	24	29.6	11.2	-12.1
Large Cap	34.6	25.9	-0.7	51.2	-23.7
Mid Cap	22.4	26.7	4.8	36.9	7.4
Small Cap	48.7	3.5	30.6	78.9	-34.5
Health Sector	26.5	41.9	-30.1	22.2	16.7
Tech Sector	47.8	38.2	2.2	-16.8	95.4

Question 1

Assume the investor is conservative, what is the recommended mutual fund? What are the maximum and minimum returns?

Question 2

Suppose we were given the probabilities of 0.2, 0.3, 0.1,0.1, and 0.3. Using the expected value table what is the recommended mutual fund? What is the expected return?

Question 3

What is the EMV for the fund in part A? How much of an increase can be obtained by following the recommendation of part B?

Question 4

Which of the two funds appears to have more EOL? Is the increase in EOL worth the potential increase in gain? Explain.

Reference no: EM132041766

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