• YOUR 401(K) ACCOUNT AT EAST COAST YACHTS Lui You have been at your job with East Coast Yachts for a week now and have decided you need to sign {#I up for the company's 401(k) plan. Even after your...

YOUR 401k ACCOUNT AT EAST COAST YACHTS
Solution 1:
Considering the fact, we can see that mutual funds managers would be able to outperform the
market, the main reason behind this is due to the Darwinian nature of the business. The managers
who perform well are rewarded whereas the managers who are not performing are generally fired
or terminated, if they are not performing well consistently.
It is expected that less than 50 percent of all equity mutual funds are likely to outperform the
market, it is not directly associated with the market efficiency. To get the market average we
would expect one-half of investors would outperform the market, and one-half would
underperform the market, with which the market average can be maintained.
This is definitely true if we consider the weighted average return, that is, the average return of
investors weighted by the dollar amount of the investment. It can be expected that more than 50
percent of mutual funds would underperform the market because of the expenses charged by the
mutual funds. The expense ratio for the large-cap stock fund is expected to be 1.50 percent,...