Interest rate. Two mutual fund managers, Martha and David, have been discussing whose fund is the top performer. Martha states that investors bought shares in her mutual fund 10 years ago for $30.00, and those shares are now worth $58.0o. David states that investors bought shares in his mutual fund 6 years ago for only $2.90, and they are now worth $7.30. Which mutual fund manager had the higher growth rate for the management period? Should this comparison be made over different management periods? Why or why not? Which mutual fund manager has had the highest growth rate for the management period? (Select the best response.) O A. David has had the highest growth rate of 6.81% for the management period. O B. David has had the highest growth rate of 16.63% for the management period. OC. Martha has had the highest growth rate of 6.81% for the management period. O D. Martha has had the highest growth rate of 16.63% for the management period. Which of the following statement is true? (Select the best response.) O A. A valid comparison can only be made over the same management period due to changing market conditions. B. A valid comparison can only be made over the same management period due to tax considerations. OC. A valid comparison can only be made over different management period due to changing market conditions. O D. A valid comparison can only be made over different management period due to tax considerations.
Interest rate. Two mutual fund managers, Martha and David, have been discussing whose fund is the top performer. Martha states that investors bought shares in her mutual fund 10 years ago for $30.00, and those shares are now worth $58.0o. David states that investors bought shares in his mutual fund 6 years ago for only $2.90, and they are now worth $7.30. Which mutual fund manager had the higher growth rate for the management period? Should this comparison be made over different management periods? Why or why not? Which mutual fund manager has had the highest growth rate for the management period? (Select the best response.) O A. David has had the highest growth rate of 6.81% for the management period. O B. David has had the highest growth rate of 16.63% for the management period. OC. Martha has had the highest growth rate of 6.81% for the management period. O D. Martha has had the highest growth rate of 16.63% for the management period. Which of the following statement is true? (Select the best response.) O A. A valid comparison can only be made over the same management period due to changing market conditions. B. A valid comparison can only be made over the same management period due to tax considerations. OC. A valid comparison can only be made over different management period due to changing market conditions. O D. A valid comparison can only be made over different management period due to tax considerations.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**Interest Rate Comparison**
Two mutual fund managers, Martha and David, have been discussing whose fund is the top performer. Martha states that investors bought shares in her mutual fund 10 years ago for $30.00, and those shares are now worth $58.00. David states that investors bought shares in his mutual fund 6 years ago for only $2.90, and they are now worth $7.30.
**Question 1: Which mutual fund manager had the highest growth rate for the management period?**
Options:
- **A.** David has had the highest growth rate of 6.81% for the management period.
- **B.** David has had the highest growth rate of 16.63% for the management period.
- **C.** Martha has had the highest growth rate of 6.81% for the management period.
- **D.** Martha has had the highest growth rate of 16.63% for the management period.
**Question 2: Which of the following statements is true?**
Options:
- **A.** A valid comparison can only be made over the same management period due to changing market conditions.
- **B.** A valid comparison can only be made over the same management period due to tax considerations.
- **C.** A valid comparison can only be made over different management periods due to changing market conditions.
- **D.** A valid comparison can only be made over different management periods due to tax considerations.
**Discussion:**
The comparison of mutual fund performance often depends on factors such as the investment period, market conditions, and tax implications. This scenario challenges the reader to consider how these elements affect the validity of performance comparisons.
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