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FIN 402 Week 2 Assignment Case Problem 2.1 Traditional
Versus Modern Portfolio Theory Who’s Right
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Case Problem 2.1 Traditional Versus Modern Portfolio Theory: Who’s
Right?
Walt Davies and Shane O’Brien are district managers for Lee, Inc. Over
the years, as they moved through the firm’s sales organization, they
became (and still remain) close friends. Walt, who is 33 years old,
currently lives in Princeton, New Jersey. Shane, who is 35, lives in
Houston, Texas. Recently, at the national sales meeting, they were
discussing various company matters, as well as bringing each other up to
date on their families, when the subject of investments came up. Each
had always been fascinated by the stock market, and now that they had
achieved some degree of financial success, they had begun actively
investing.
As they discussed their investments, Walt said he thought the only way
an individual who does not have hundreds of thousands of dollars can
invest safely is to buy mutual fund shares. He emphasized that to be safe,
a person needs to hold a broadly diversified portfolio and that only those
with a lot of money and time can achieve independently the