The Damon Investment Company manages a mutual fund composed mostly of speculative stocks. You recently saw an ad claiming that investments in the funds have been earnings rate of return of 21%. This rate seemed quite high so you called a friend who works for one of Damon's competitors. The friend told you that the 21% return figure was determined by dividing 10 the two-year application on investments in the fund by the average investments. In other words, $100 invested in the fund two years ago would have grow

n to $121 ($21/$100=21%).

Discuss the ethics of the 21% return claim made Investment Company.

LO5-1 The Damon 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 21%. This rate seemed quite high so you called a friend who works for one of Damon's competitors. The friend told you that the 21% return figure was determined by dividing the two-year appreciation on investments in the fund by the average investment. In other words, $100 invested in the fund two years ago would have grown to $121 ($21 + $100 = 21%). Required: Discuss the ethics of the 21% return claim made by the Damon Investment Company