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%?

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The Answer of 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%?

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