The table shows all the mutual funds in a fund family. Each fund inves

Official Explanation

Statement 1: Edward I has a 1.5% expense ratio, so the 10% gain in the portfolio will become an 8.5% total return, which, for a $10,000 investment, is $850. Thus, in one year the value of the investor’s assets in the fund will be $10,850.

Answer: Inferable

Statement 2: The correct answer is (B). You cannot infer that this statement is correct because you do not know how the returns were distributed over the 3 years in each fund. For instance, an annual return of 0%, 0%, and 30% over three years produces an average of 10% for the 3-year period, as does an annual return of 10% in each of the three years. If you invested $100 and received the 0/0/30 return, your total would be $130 after the 3 years, but if you invested $100 and received the 10/10/10 return, your total would be $133.10 after the 3 years.

Answer: Not Inferable

Statement 3: The correct answer is (B). The 10-Year Average Annual Returns of the Large-Cap funds range from 6.47% to 2.39%, or 4.08 points. The 10-Year Average Annual Returns of the Mid-Cap funds range from 7.37% to 3.68%, or 3.69 points. Thus, the range is greater for LargeCap, not Mid-Cap, funds.

Answer: Not Inferable