Question
You have saved $100,000 for retirement. The money is invested in a diversified portfolio of U.S. stocks, but your financial advisor is trying to convince
You have saved $100,000 for retirement. The money is invested in a diversified portfolio of U.S. stocks, but your financial advisor is trying to convince you to move some money into one of the following mutual funds. The table shows the funds performance from 1990 2000. Over the same period, the S&P 500 returned 13.7% annually, had a standard deviation of 15.9%, and the Tbill rate averaged 4.5%.
Fund name | Avg. return | Standard deviation | beta |
Lucky | 11.3 | 21.8 | 0.7 |
Bull | 13.9 | 27.2 | 1.1 |
High five | 16.3 | 29.1 | 1.3 |
1) Which mutual fund invests in the riskiest stocks? Why?
2) Would you want to invest in any of the funds? Why or why not?
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