You Are Considering the Risk-Return Profile of Two Mutual Funds

question 117

Short Answer

You are considering the risk-return profile of two mutual funds for investment. The relatively risky fund promises an expected return of 9%, with a standard deviation of 12%. The relatively less risky fund promises an expected return and standard deviation of 5% and 8%, respectively.
A) Which mutual fund will you pick if your objective is to minimize the probability of earning a negative return?
B) Which mutual fund will you pick if your objective is to maximize the probability of earning a return of between 8% and 12%?

• A) Which mutual fund will you pick if your objective is to minimize the probability of earning a negative return?
• B) Which mutual fund will you pick if your objective is to maximize the probability of earning a return of between 8% and 12%?

Appreciate the challenges of experimental research in human development.

Distinguish between different types of experiments and research methodologies.

Assess ethical considerations in psychological research.

Understand the challenges and considerations in different research designs (longitudinal, cross-sectional, sequential).

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Definitions:

Long-Term Investments

Assets intended to be held for more than one year, including stocks, bonds, real estate, and other financial instruments.

Equity Securities

Financial instruments that represent ownership interests in corporations, such as stocks.

Market Prices

The current price at which an asset or service can be bought or sold in a particular marketplace.

Formative Evaluation

An evaluative process conducted during the development of a program or project to improve its design and performance through ongoing feedback.