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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
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 returns are approximately normally distributed.
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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%?
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