You cannot wait to graduate to start your career full-time at your dream company A, which is

Fantastic news! We've Found the answer you've been seeking!

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:

Stock “A” and the ChicagoTrade Small-Cap Stock Fund

The ChicagoTrade S&P 500 Index Fund

Stock “A”

The ChicagoTrade Small-Cap Stock Fund

If your goal is to create a diversified portfolio for your 401(K) at company “A”, all the information provided above means that your best decision is:

		The ChicagoTrade Small-Cap Stock Fund and the ChicagoTrade S&P 500 Index Fund
		The ChicagoTrade Small-Cap Stock Fund
		Stock “A” and the ChicagoTrade Small-Cap Stock Fund
		The ChicagoTrade Small-Cap Stock Fund and the Vanguard S&P 500 Index Fund