Econ 205 Professor Joel David Fall 2013 Homework 4 Part 1 – Finance In this exercise, you will obtain and summarize data on the performance…

Econ 205

Professor Joel David

Fall 2013

Homework 4

Part 1 – Finance

In this exercise, you will obtain and summarize data on the performance of the US stock 

market (measured using the S&P 500 index) and a mutual fund of your choice. You will 

have to find mutual fund data online and compare the performance of the fund to the 

overall market.

1. Data on market performance are available from many sources. We will use 

Google. Go to finance.google.com. Click the S&P 500 link and then the 

“Historical prices” link on the left hand side of the page. Change the period to be 

December 31, 2002 to September 26, 2013.

2. Make a table containing the closing prices for the S&P 500 on the last day of the 

year for the years 2002 to 2012 and on September 26, 2013. In a second column, 

compute the percentage change in the S&P 500 between each date and the 

previous one, i.e., compute annual percentage changes for 2003-2012 and the 

year-to-date percentage change for 2013. These are returns on the US stock 

market. Tables should be done in Excel, not by hand.

3. What was the total return on the market from year-end 2002 through September 

26, 2013? What about from year-end 2002 to year-end 2007? And year-end 2008 

through September 26, 2013?

4. How did the market perform during 2008? Is it fair to say market returns were 

high in the two periods surrounding 2008 and fell dramatically in 2008?

5. Find a mutual fund of your choice online. Some examples are available at

http://money.usnews.com/funds/mutual-fundsif you cannot find one on your own 

(hint: ask your parents if they have money in a mutual fund and use that one). 

You may not use an S&P 500 fund.

6. Obtain data on performance of the fund over the last 5 years and for year-to-date 

2013.

7. Create a table comparing the returns on your fund to the S&P 500. Account for 

expense ratios, if possible, i.e., subtract the expense ratio from the reported return. 

Make sure to note the source of the mutual fund data, i.e., the website where you 

found the data.

8. How did your fund perform compared to the market over the past 5 years? Would

an investor have been better off investing in your fund or in a fund that mimics 

the performance of the S&P 500? How about year-to-date 2013? If you can, go 

back even further in time, for example, 10 years. Now how does your fund 

compare?