Question: QUESTION 26 You are a risk-averse mean-variance optimizer. Consider the following table of expected returns, standard deviations, and betas for three different mutual funds: Mutual

QUESTION 26 You are a risk-averse mean-variance optimizer. Consider the following

QUESTION 26 You are a risk-averse mean-variance optimizer. Consider the following table of expected returns, standard deviations, and betas for three different mutual funds: Mutual fund Expected Return 15% 15% 8% tandard Deviation VFA SPY FDR 14% 19% 14% Beta 1.50 1.05 1.25 If you were planning to invest all of your money in only one of the investments described above, which would you choose? Fully discuss your rationale If you were planning to add a small investment in one of the above mutual funds to your overall portfolio, which would you choose? Fully discuss your rationa b. c. Do your answers to parts a and b differ? If so, why? If not, why not

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