The following returns were earned last year: Fund A,10%,Fund B,18%,the overall market,11%.Fund A's beta was 0.8 while Fund B's was 2.0.Therefore,the best investment was Fund A.

Question

Quizplus · Accepted Answer

Beta is a measure of the volatility of a stock or portfolio compared to the overall market. If a fund has a higher beta, it is more volatile and has a higher potential return or loss. As Fund B has a higher beta than Fund A, it had a higher potential return but also a higher potential loss. However, since Fund A earned a higher return than the overall market and had a lower risk compared to Fund B, it can be considered the best investment option.

The Following Returns Were Earned Last Year: Fund A,10%,Fund B,18%,the