Option of investing in two different mutual funds

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Jasmine has the option of investing in two different mutual funds. The return on the wan-guard Fund tends to fluctuate widely, earning substantial positive returns one year only to realize negative returns the next year. The ABCD fund has never had a year with a negative return and has a return very similar to the S&P/TSX Composite Index. However, both wan-guard and the ABCD fund posted 10-year average annual returns of 10%. All of the following statements regarding the comparison of the two mutual funds with similar long-term performance are true, EXPECT:

a) Jasmine should consider the consistency of a fund's return from year to year rather than a single compounded rate of return.

b) Jasmine should select the fund with the lower volatility.

c) Since both funds had the same long-term performance, the fund with the greater volatility would be preferred since it has the potential to earn a higher return.

d) The ABCD fund would have a beta factor of about 1.

Reference no: EM132613460

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