Your 401(K) Account at East Coast Yachts You have been at your job with East Cost Yachts for week now and have decided you need to sign up for the company's 401 (K) plan. Even after your discussion with Sara Brown, the Bledsoe Financial Services representative, you are still unsure which investment option you should choose. Recall that the options available to you are stock in East Coast Yachts, the Bledsoe S\&P 500 Index Fund, the Bledsoe Small-Cap Fund, the Bledsoe Large-Company Stock Fund, the Bledson Bond Fund, and the Bledsoe Money Market Fund. You have decided that you should invest in a diversified portfolio, with 70 percent of your investment in equities, 25 percent in bonds, and 5 percent in the money market fund. You also have decide to focus your equity investment in large-cap stocks, but your ate debating weather to select the S\&P 500 Index Fund for Large-Company Stock Fund. In thinking it over, you understand the basic difference in the two funds. One is a purely passive fund that replicates a widely followed large-cap index, the S\&P 500, and has low fees. The other is actively managed with the intention that the skill of the portfolio manager will result in improved performance relative to an index. Fees are higher in the latter fund. You're not certain which way to go, so you ask Dan Ervin, who works in the company's finance area, for advice. After discussing your concerns, Dan gives you some information comparing the performance of equity mutual funds and the Vanguard 500 Index Fund. The Vanguard 500 is the world's largest equity index mutual fund. It replicates the S\&P 500 and its return is only negligibly different from the S\&P 500. Fees are very low. As a result, the Vanguard is essentially identical to the Bledsoe S\&P 500 Infex Fund offered in the 401(K) plan, but it has existed for much longer, so you can study its tracks record for over two decades. The graph summarized Dan's comments by showing the percentage of equity mutual funds that outperformed the Vanguard 500 Fund over 10 year period. For the 20 investment periods shown (1998-2007 through 2009-2018), in only 11 of these periods did more than 50 percent of mutual fund manager beat the Vanguard 500 Index Fund. Dan suggests that you study the graph and answer the following questions: (Case source: Fundamental of Investments, 9th ed. (New York: McGraw-Hill, 2021) 1. What implications do you draw from the graph for mutual fund investors? 2. Is the graph consistent or inconsistent with market efficiency? Explain 3. What investment decision would you make for the equity portion of your 401(K) account? Why