Which of the following, if true, weakens Darrell’s management strategy

QUESTION

Which of the following, if true, weakens Darrell’s management strategy?

A) Economics experts predict that Social Security will be bankrupt by 2050.
B) Surveys show that four out of five young investors are mostly interested in long-term returns.
C) Bonds have outperformed stocks by 8 percent over the last ten years.
D) The savings rates of newly hired employees have risen 5 percent since 2008.
E) Standard and Poor’s recently reduced its long-term rating of U.S. government bonds.

ANSWER

Answer: B
Explanation: B) A low-risk fund based on bonds and money market certificates will almost always underperform compared to a balanced or aggressive fund. So Choice B is correct: If young investors are most interested in maximizing long-term returns, then Leonid will be seen as a bad bet. Choices A and D might be reasons that support the growth of mutual funds overall, but they do not support Darrell’s specific strategy. Choice E is not relevant, as government bonds are still rated as investment-grade. Choice C tends to support Darrell’s strategy, at least in the short term.