Which manager is likely to see higher returns over a year

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Two mutual fund managers are discussing their investment strategies over lunch. The first manager follows a value-oriented strategy of selectively buying stocks with high equity book-to-market ratios. The second manager prefers firms with high earnings growth that hopefully will lead to high stock price appreciation.

a. Which manager is likely to see higher returns over a 1-year investment horizon? Why?

b. Which manager is likely to see higher returns over a 10-year investment horizon? Why?

c. Which manager is likely to see higher returns on a risk-adjusted basis over a 10-year investment horizon? Explain your answer.

Reference no: EM13871493

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