IFIC - Section 5 Chapter 14 - Understanding Mutual Fund Performance well answered to pass

IFIC - Section 5 Chapter 14 -
Understanding Mutual Fund
Performance well answered to pass

How is portfolio performance evaluated? - correct answer ✔✔ (Ending NAVPS - Beginning
NAVPS)/Beginning NAVPS X 100



What is the percentage gain or loss on XYZ Mutual Fund based on the following details: beginning NAVPS
= $18.40; ending NAVPS $17.60?



18.40-17.60/17.60 x 100 = -4.35



What is the Sharpe ratio ? - correct answer ✔✔ Sharpe Ratio: developed to consider both risk and return
of a portfolio.



Sharpe Ratio = (Return of Portfolio - Risk Free Rate)/Standard Deviation of Portfolio



Three month Treasury bill rate = 2.40%; T. North Fund one year return = 5.40%; standard deviation of T.
North Fund = 4.20%?



5.40-2.40/4.20 = 0.71




(When managers are measured against a benchmark, the protfilio sharpe ratio can be compared; higher
the sharpe ratio the more desirable the investment.)



How is performance assessment conducted? - correct answer ✔✔ Performance assessment involves
comparing mutual fund manager's results with those of a benchmark to determine if there has been a
"good" return on investment.