Investment companies attempt to explain to investors the nature of the risk the investor incurs when buying shares in their mutual funds. For example, Vanguard (a U.S. company) carefully explains interest-rate risk and offers alternative funds with different interestrate risks. Go to http://flagship.vanguard.com/VGApp/hnw/FundsStocksOverview.

a. Select the bond fund you would recommend to an investor who has very low tolerance for risk and a short investment horizon. Justify your answer.

b. Select the bond fund you would recommend to an investor who has very high tolerance for risk and a long investment horizon. Justify your answer.