You cannot wait to graduate to start your career full-time at your dream company A, which is
Question:
You cannot wait to graduate to start your career full-time at your dream company “A,” which is classified as a large-cap. Company A offers 401(K) with the following equity choices:
- stock “A”
- the ChicagoTrade S&P 500 Index Fund
- the ChicagoTrade Small-Cap Stock Fund (actively managed)
You also learned that returns from the ChicagoTrade S&P 500 Index Fund are similar to those from Vanguard S&P 500 Index Fund. The graph below shows the historical percentages of actively managed funds beating the Vanguard S&P 500.
The graph shows the percentage of managed equity funds beating the Vanguard 500 Index Fund 10-year returns.
Based on the graph, which of the following is correct?
In year 1993, there were about 80% of actively managed funds that performed better than the overall market. | ||||||||||||||||||||||||||
From 1986 to 2006, there are only two years (1986 and 1987) that Vanguard S&P 500 did better than 50% of actively managed funds. | ||||||||||||||||||||||||||
Market is efficient. | ||||||||||||||||||||||||||
All of the above (A, B, C) are correct. If you want to pick a vehicle for large-cap investment, all the information provided above means that your best choice for your 401(K) at company “A” is:
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Statistics The Art and Science of Learning from Data
ISBN: 978-0321755940
3rd edition
Authors: Alan Agresti, Christine A. Franklin