FI.Chapter7 - PerteEEm TRce*ry eerd#tEc*r&sse PnEee*g...

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r.'e\. ..rlI 1.r,le- L!.1 D) rniJ 2006.1u\- cvcr, they had inveslecl nrorc than 59 trilhn n! u.)l furd.l\.l.,nl\ l'.r. rh, nn-orrr. or led, but the larieiv of funds is astour.lint \bu can bul' funcls that spccialize llr firiuallv any iype of assei, Ilrnds that specialize in .r'" I, I orr ., f"r.ifr l.,r rr.l.r. .ry. J pJrr. . rl lnr contilcnt, or a p.rrLi(Lrlar courltry. There are lnolley rnarkci runds that inlesi onlt in ft'd-rrr) brll- .'IC ,'ll,fr.l,,'rt rpfln -e,u,i- rr-, rr.l ll'erF "rF,r.n fund, rhd. LoLi m!nicipal bonds from a specific siate. for (ho-e '' v ',, s,r1, , .o ,., . on. . :r , , 'oI . ir, bu \ iund.th.rtnfu.e(oohn.lo.l. ' ' . n.p4n'e- h.,l t.,llr.r, -ell rob ,, ,,' plr.{rcts, or have lvorkf(rrccs that are no! culiurally diverse. For othcrs, there is the \i(pl-Lr d, $1,'.1, r\u:r,or lr rr br,.'r. da e--F . orlr. ( t,.r. . r,n'.r. , o . nmp.'rrr. . and the like. \",. , an dl.o l.u\' rr.r,l, r n. ,.trdl un.i- "Lr. r -.ll -,n e ,r^. L. -h.,rr, r\,.\. n olll ers, and promisc (pcrhnps falsel)') io do well flo rndller \ h.ch \. y (h( m.rrket 8u,. . l-er' Sor.eJ rfe Secdrie drty.id rln.^.o Morlat A$o.ori.n luic 2006, hrF://M.rio.rcm/Essfth/pdllkeystots-p! , 'T,eMonyNewfo.esofMduo Fuds, fo,tuna,luy6, 1993,pp217-213:ondSteerMylh5,'F.iune,M.y24,1999,p324 Pert€eEEm TRce*ry eerd #tEc*r &sse* PnEee*g fleSede!= mericans lovr nrut nl funds. By 1985, they had investcd about 5'195 billion in mutlral funds, which is r. tlr" Undr-.u\e,c(l \4,r.'q,r, Beh.'\r,' Jl fund that picks stocks by psychoanalyzing Wnll Strcct anallrsts. And thcrl th€re is the l,'rIt. urc iunJ wh .h ,,wf. ,r".k' .'nly fronr the funeral industry. Y 'u , 'r b, r\ Jr Ind(\ tr I J. \ l.r,l -ilp \ h"l{\ n porllolo .i -1," } . r, ,r, ir'Je\ .u, r (toesn't trv io beat ihe market. Inrtcad, index fLrnc{s striVc for lo\\' L\F, r-e. .J rd pr,. rlrq -,r\ ir$. .,I r^ invcstors. An Exchango Tricled Fund, or l.l-l-. ,.. r u.rll) 1,.,. ,1. utr,, -r, \ | rl, r r- tr.,d-.1 .'n ,r ..o.L c\.l rn8F. Ditf,{, ur l lf- l,ol(l uidcly varicd portfolios, ranging from the q'10 lu go J nrininE" ,, rp. r:e- ^ \4r,l,ll" t.r.LFrn ,'il r.'n,p"rrr, -. drd l,<i' r'\. r', I.,nd rprn In!e.t.,r. .,r, Llu, p lo{ At
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242 Por{olio Theory ofd O$er Aset Prc n9 Modek In Clupier 6 we presentecl thr kcy elements of risk and rcturn analysjs. There l e sai{ that much of a stock's risk can be eliminaled bv djve$ification, so rational nrvesbrs should hold portfoh)s of stocks rather lhan just one siock. We also
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FI.Chapter7 - PerteEEm TRce*ry eerd#tEc*r&sse PnEee*g...

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