1. Your friend is new to investing in the stock market. She wants to begin saving for retirement and is considering two mutual funds. One is an S&P 500 passive index fund, and the other is an actively managed stock fund that beat the S&P 500 by 7% last year. What advice would you give her? Assume you want the best for this friend.

b Another friend likes buying individual stocks. One stock he recommends has a 5% dividend yield. He says, "I prefer this over a stock that doesnt pay dividends, because at least Im earning 5% on my money. Evaluate his statement.