Question

Fund A Fund B Beta 1.75 1.05 Investor A 24% 76% Investor B 76% 24% Between...

Fund A

Fund B

Beta

1.75

1.05

Investor A

24%

76%

Investor B

76%

24%

Between Investor A and Investor​ B, which is more likely to represent a retired​ couple? ​ Why?

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Answer #1

Investor A represent a retired couple

Beta measures the systematic risk of a fund with respect to the market. A market will have a beta of 1. Fund A's beta is more than fund B's beta which states that fund A is more volatile than fund B with respect to the market. A beta of more than 1 states that fund is more volatile than the market. Therefore, fund A is riskier than fund B.

A retired couple would not want to incur much risk. Investor A has put majority of money in fund B which is less riskier than fund A. Investor B's majority of portion is in fund A which is riskier. Therefore, Investor A represent a retired couple

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