Please show work, I am lost with this chapter. Chapter 13: Decision Analysis 5.
ID: 2902079 • Letter: P
Question
Please show work, I am lost with this chapter.
Chapter 13: Decision Analysis
5.
An investor wants to select one of seven mutual funds for the coming year. Date showing the percentage annual return for each fund during five typical one-year periods are shown here. The assumption is that one of these five-year periods will occur again during the coming year. Thus, years A, B, C, D and E are the states of nature of the mutual fund decision.
State of Nature
Mutual Fund
Year A
Year B
Year C
Year D
Year E
Large-Cap Stock
35.3
20.0
28.3
10.4
-9.3
Mid-Cap Stock
32.3
23.2
-0.9
49.3
-22.8
Small-Cap stock
20.8
22.5
6.0
33.3
6.1
Energy/Resources Sector
25.3
33.9
-20.5
20.9
-2.5
Health Sector
49.1
5.5
29.7
77.7
-24.9
Technology Sector
46.2
21.7
45.7
93.1
-20.1
Real Estate Sector
20.5
44.0
-21.1
2.6
5.1
Using this mutual fund, what are the minimum and maximum annual returns?
State of Nature
Mutual Fund
Year A
Year B
Year C
Year D
Year E
Large-Cap Stock
35.3
20.0
28.3
10.4
-9.3
Mid-Cap Stock
32.3
23.2
-0.9
49.3
-22.8
Small-Cap stock
20.8
22.5
6.0
33.3
6.1
Energy/Resources Sector
25.3
33.9
-20.5
20.9
-2.5
Health Sector
49.1
5.5
29.7
77.7
-24.9
Technology Sector
46.2
21.7
45.7
93.1
-20.1
Real Estate Sector
20.5
44.0
-21.1
2.6
5.1
Explanation / Answer
1