Money in few randomly chosen stocks that make up index

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Reference no: EM131313946

A stock index fund invests in a very large number of different stocks, so the return you get from it is roughly the average return for the stocks in the index.

(a) Which of these two choices would give you a better chance of tripling your money within a month: investing all of your money in the index fund, or investing all your money in a few randomly chosen stocks that make up the index?

(b) Which of these two choices would give you a better chance of losing almost all of your money within a month: investing all your money in the index fund, or investing all your money in a few randomly chosen stocks that make up the index?

Please explain your answers for each question.

Reference no: EM131313946

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