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%?