Question: Investing: Socially Responsible Mutual Funds Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds (see Viewpoint).

‘Vanguard Balanced Index is another highly regarded fund that represents the entire

USS. 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 through 2002 (Source: Morningstar).

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

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