You are considering the risk return profile of two mutual funds for investment The relatively risky fund promises an expected return of 8 with a standard deviation of 14 The relatively less risky fund promises an expected return and standard deviation of 4 and 5 , respectively Assume that the retur...

Let X represents the return on a mutual fund a For the ...

You are considering the risk-return profile of two mutual funds for investment. The relatively risky fund promises

Question:

You are considering the risk-return profile of two for investment. The relatively risky fund promises an of 8% with a standard deviation of 14%. The relatively less risky fund promises an and standard deviation of 4% and 5%, respectively. Assume that the returns are approximately normally distributed.
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 above 8%?

Mutual Funds
Mutual funds are like a pool of funds gathered by different small investors that have simalar investment perspective about returns on their investments. These funds are managed by professional investment managers who act smartly on behalf of the... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...