Login
Premium
Home Question Bank Economics
Question
upstudy study bank question image url

Interest rate. Two mutual fund managers, Martha and David, have been discussing whose fund is the
top performer. Martha states that investors bought shares in her mutual fund 12 years ago for ,
and those shares are now worth . David states that investors bought shares in his mutual fund 7
years ago for only , and they are now worth . Which mutual fund manager had the higher
growth rate for the management period? Should this comparison be made over different
management periods? Why or why not?
Which mutual fund manager has had the highest growth rate for the management period? (Select the
best response.)
A. David has had the highest growth rate of for the management period.
B. Martha has had the highest growth rate of for the management period.

Ask by Greene Campos. in the United States
Jan 22,2025

Upstudy AI Solution

Tutor-Verified Answer

Answer

David has had the highest growth rate of approximately 18.62% for his management period.

Solution

To determine which mutual fund manager, Martha or David, had the higher growth rate for their respective management periods, we’ll calculate the Compound Annual Growth Rate (CAGR) for each fund. The CAGR provides a consistent measure of growth over multiple periods.

1. Calculating CAGR for Martha’s Fund

  • Initial Investment: $22.00
  • Final Value: $50.00
  • Investment Period: 12 years
CAGR Formula:

2. Calculating CAGR for David’s Fund

  • Initial Investment: $2.30
  • Final Value: $7.60
  • Investment Period: 7 years

3. Comparison and Considerations

  • Higher Growth Rate: David’s mutual fund achieved a higher CAGR of approximately 18.62% compared to Martha’s 7.08%.
  • Different Management Periods: While CAGR accounts for different time periods by providing an annualized growth rate, it’s essential to consider other factors such as risk, volatility, and investment strategies when comparing funds over different durations. However, for the purpose of evaluating pure growth rates, comparing CAGR across different periods is generally acceptable.

Conclusion

Option A is the correct answer.
Answer:
A. David has had the highest growth rate of for the management period.

Answered by UpStudy AI and reviewed by a Professional Tutor

error msg
Explain
Simplify this solution

Mind Expander

To find out which mutual fund manager had the highest growth rate, we can use the compound annual growth rate (CAGR) formula:
For Martha:
For David:
So, the best response is:
A. David has had the highest growth rate of for the management period.
Comparing growth rates over different time periods can be misleading because shorter periods may show more volatility, while longer periods can even out fluctuations. It’s essential to normalize and compare growth rates over equivalent time frames for a fair assessment of performance.
When examining mutual funds, it’s wise to consider the context of the market during the management periods. Variables like economic conditions, market cycles, and sector performance can all impact returns significantly, making it paramount to analyze them alongside growth rates for a comprehensive view.
In any investment journey, understanding the compound effect can be a game-changer! Small consistent returns can snowball over time, reminding us that patience could indeed be our greatest ally in wealth-building.

Related Questions

In the past, the United States exported more goods and services than it imported. However, since 1975 it has bought more goods from other nations than it has sold and thus has a trade deficit. Over the past few years, the United States ran its highest trade deficits with China. Still the United States remains one of the world's largest exporting nations even though the U.S. exports a much lower percentage of its products than other countries, such as China, Japan and Germany. Improving that percentage by expanding exports is a goal the U.S. hopes to achieve by 2015 . Source: William Nickels, et al. Understanding Business, 10e. (i) Instructions Goods exported from the U.S. used to be more numerous than those imported into this country. But starting in 1975, the U.S. has had a trade deficit, especially with China in recent years. However, even though the U.S. exports a relatively low percentage of its goods, it is still among the most prolific exporters in the world, and the quality of its exports is unsurpassed. By 2015, the U.S. would like to export a larger percentage of its goods in order to become an even more influential world superpower (Nickels et al., 2014).
Economics United States Mar 31, 2025
A variable that can't be accounted for is  The author backs up the statement that the economy  can be unpredictable by pointing out that  a natural disaster such as a hurricane. As the  result of a hurricane, demand is guaranteed  to increase in a way that could not have been  predicted because the flow of goods into  impacted areas is blocked. If crops or power  facilities like oil refineries are damaged, then  demand is also affected.  system is strong.  natural disasters can affect the demand for goods and  disrupt production.  customers are more willing to buy something when  interest rates are low.  inflation occurs when prices for goods and services  decrease too quickly. 
Economics United States Mar 31, 2025
The cost of goods sold for Home Depot last year amounted to $3,530,800 and the average inventory at cost was $1,$74,182. The published inveriory turnover at cost is 5,2 . Calculate the inventory turnover at cost, and if it is less than the published rate, calculate the target average inventory at cost. Select one: a. $302,727 b. $679,000 (c. $490,864 (d. $981,727
Economics United States Mar 31, 2025
40-year-old man in the U.S. has a 0.243% risk of dying during the next year. An insurance company charges $260 per ear for a life-insurance policy that pays a $100,000 death benefit. What is the expected value for the person buying the nsurance? Round your answer to the nearest dollar. Expected Value: $−37.00 for the year
Economics United States Mar 31, 2025
Prepaid expenses at the beginning of the year relates to security fees that was paid in the previous financial year. As per the contract with ADL, security fees are payable half yearly in advance on 1 July and 1 January respectively. The security fee contract also makes provision for an annual increase on 1 July of 15% of the monthly premium.
Economics South Africa Mar 31, 2025

Latest Economics Questions

/ Chapter 5 - Elasticity / 5.1: Calculating Demand and Supply Elasticity 5.1: Calculating Demand and Supply Elasticity ion 3 mplete d out of 9 ion Price: $4.0 Short-Term Demand Price $6.28.8 million units Answer: ◻ Check
Economics Canada Mar 31, 2025
why is it helpful to a Roth Ira? is money saved in the bank Is a retirement plan, where money grows, and that is tax free by the age of 59.5
Economics United States Mar 31, 2025
\begin{tabular}{l|l}\multicolumn{1}{l}{ A variable that can't be accounted for is } & The author backs up the statement that the economy \\ can be unpredictable by pointing out that \\ a natural disaster such as a hurricane. As the & result of a hurricane, demand is guaranteed \\ to increase in a way that could not have been & (A) banking panics occur when confidence in the financial \\ system is strong. \\ predicted because the flow of goods into & (B) natural disasters can affect the demand for goods and \\ disrupt production. \\ impacted areas is blocked. If crops or power \\ facilities like oil refineries are damaged, then & C. customers are more willing to buy something when \\ interest rates are low. \\ demand is also affected. & (D) inflation occurs when prices for goods and services \\ decrease too quickly. \end{tabular}
Economics United States Mar 31, 2025
In the past, the United States exported more goods and services than it imported. However, since 1975 it has bought more goods from other nations than it has sold and thus has a trade deficit. Over the past few years, the United States ran its highest trade deficits with China. Still the United States remains one of the world's largest exporting nations even though the U.S. exports a much lower percentage of its products than other countries, such as China, Japan and Germany. Improving that percentage by expanding exports is a goal the U.S. hopes to achieve by 2015 . Source: William Nickels, et al. Understanding Business, 10e. (i) Instructions Goods exported from the U.S. used to be more numerous than those imported into this country. But starting in 1975, the U.S. has had a trade deficit, especially with China in recent years. However, even though the U.S. exports a relatively low percentage of its goods, it is still among the most prolific exporters in the world, and the quality of its exports is unsurpassed. By 2015, the U.S. would like to export a larger percentage of its goods in order to become an even more influential world superpower (Nickels et al., 2014).
Economics United States Mar 31, 2025
Prepaid expenses at the beginning of the year relates to security fees that was paid in the previous financial year. As per the contract with ADL, security fees are payable half yearly in advance on 1 July and 1 January respectively. The security fee contract also makes provision for an annual increase on 1 July of 15% of the monthly premium.
Economics South Africa Mar 31, 2025
Prev Next
Try Premium now!
Try Premium and ask Thoth AI unlimited math questions now!
Maybe later Go Premium
Study can be a real struggle
Why not UpStudy it?
Select your plan below
Premium

You can enjoy

Start now
  • Step-by-step explanations
  • 24/7 expert live tutors
  • Unlimited number of questions
  • No interruptions
  • Full access to Answer and Solution
  • Full Access to PDF Chat, UpStudy Chat, Browsing Chat
Basic

Totally free but limited

  • Limited Solution
Welcome to UpStudy!
Please sign in to continue the Thoth AI Chat journey
Continue with Email
Or continue with
By clicking “Sign in”, you agree to our Terms of Use & Privacy Policy
Pop-up title
Lorem ipsum dolor sit amet, te everti debitis assentior nam, ne illum utroque principes sed. Ridens phaedrum an vix, qui in dolore appareat.