Flipping Funding

Flipping Funding

by flipping a coin what is the probability the fund outperforms the S & P index at least 8 of the next 10 yrs.?

additional question for practice
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A mutual fund is a collection of investments managed by fund manager. The S & P index is a measuring stick for mutual fund performance. In the 80’s 5 of the 277 best known mutual fund managers were bragging that their mutual funds outperformed the S & P index 8 of 10 years.

prob(8) = (10C8)[(1/2)^8][(1/2)^2] = 45*(1/2)^10

prob(9) = (10C9)[(1/2)^9][(1/2)^1] = 10*(1/2)^10

prob(10) = (10C10)[(1/2)^10] = 1*(1/2)^10

total = 56*(1/2)^10 = 0.0547

Fix and flip funding

Flipping Funding

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