The following information is to be used to answer the following questions
Over the 11-year period,1997-2007, the Market Index (MI) had an average annual return of 13.5 percent and a standard deviation of 9 percent. The average annual return on Treasury bills was 6.75 percent. For four open-end mutual funds, some summary data are shown:

-The mutual fund with the greatest diversification was:
A) Fund 1.
B) Fund 2.
C) Fund 3.
D) Fund 4.

Question

The following information is to be used to answer the following questions
Over the 11-year period,1997-2007, the Market Index (MI) had an average annual return of 13.5 percent and a standard deviation of 9 percent. The average annual return on Treasury bills was 6.75 percent. For four open-end mutual funds, some summary data are shown:
 
-The mutual fund with the greatest diversification was:
A) Fund 1. 
B) Fund 2. 
C) Fund 3. 
D) Fund 4.

Quizplus · Accepted Answer

Fund 3 offers the greatest diversification because it invests in a wider variety of asset classes or sectors, spreading out the risk more effectively than the other options. Diversification is a strategy that mixes a wide variety of investments within a portfolio to minimize risk.

The Following Information Is to Be Used to Answer the Following