Topic_4_E1 - Topic 4 Exercise 1 Mutual Funds The Best...

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Topic 4 Exercise 1 Mutual Funds The Best Mutual Funds When the fainthearted investor surveys the devastating losses of the past two years, the choice between growth and value, large-cap and small-cap, or bonds and stocks becomes unclear because the differences in value have narrowed. The worst tactic would be to sit on the sidelines because now is the time to buy low. The BusinessWeek Mutual Fund Scoreboard is based on the belief that seasoned managers of funds with solid track records can help us beat the market with above average returns for the least risk. Read the BusinessWeek article, “The Best Mutual Funds,” and answer the following questions: 1. Although past performance doesn’t guarantee future results, what method does the Mutual Fund Scoreboard use to pick the A-rated mutual funds? A-rated funds are the pick of the long-term buys. They have the best risk-adjusted returns over five years. Each fund’s pretax returns are adjusted for the amount of risk the manager ran to achieve the results. When a fund does not beat risk-free treasury bills, it
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This note was uploaded on 10/28/2009 for the course MBA MBA608 taught by Professor Martin during the Spring '09 term at Beirut Arab University.

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Topic_4_E1 - Topic 4 Exercise 1 Mutual Funds The Best...

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