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

question 98

Essay

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 between 8% and 12%?

---

Definitions:

Reported Malaria Cases

The number of malaria infections documented within a specific time frame and area, typically reported by health authorities.

West Africa

A region located in the western part of the African continent, comprising various countries each with its distinct cultures and languages.

Fuel Efficiency

The efficiency with which a fuel's energy content is converted into useful work or output, such as miles per gallon for vehicles.

MPG-City

A metric used to express the number of miles a vehicle can travel using one gallon of fuel under city driving conditions.