Question
Part 1 of 2 - Graph to follow You have decided to diversify a portfolio with 70% invested in large-cap equities, 25 % in bonds
Part 1 of 2 - Graph to follow
You have decided to diversify a portfolio with 70% invested in large-cap equities, 25 % in bonds and 5% in a money market fund. The information you have been given is that Vanguard 500Index Fund is essentially identical to your index funds. For the 20 investment periods shown in the graph (1986-2014), in only 7 of these periods did more than 50 % of the mutual fund managers beat the Vanguard 500 Index Fund. Using the graph- Is the graph consistent with market efficiency and what investment would you make with the equity portion of your account?
Please explain your steps and rational, I am really trying to understand this
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