CFA Level 1 Mutual Funds Cash Position

Weighted Average Cash Position Calculation

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Question

You are examining a group of 20 mutual funds. You find that 10 have a 5% cash position, 4 have a 10% cash position, and 6 have a 2% cash position. What is the weighted average cash position of these 20 mutual funds?

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Explanations

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A. B. C. D.

B

A weighted-average is equal to the sum (as i goes from 1 to n) of w_i * X_i, where w_i is the percentage weight of the ith item, and X_i is the value of the ith item.

Here, we get a weighted mean of 10/20 * 0.05 + 4/20 * 0.10 + 6/20 * 0.02 = 5.10%.

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