Question
The Acme Investment Company manages a mutual fund composed mostly of speculative stocks. You recently saw an ad claiming that investments in the funds have
The Acme Investment Company manages a mutual fund composed mostly of speculative stocks. You recently saw an ad claiming that investments in the funds have been earning a rate of return of 23%. This rate seemed quite high, so you called a friend who works for one of Acme's competitors. The friend told you that the 23% return was determine by dividing the two-year appreciation on investments in the fund by the average investment. For example, $100 invested in the fund two years ago would have grown to $123 ($23/$100 = 23%). Your assignment: Discuss the ethics of the 23% return claim made by the Acme Investment Company.
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