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

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Statistics

You are considering the risk-return of two mutual funds forinvestment. The relatively risky fund promises an expected returnof 14.7% with a standard of 15.6%. The relatively less risky fundpromises an expected return and standard deviation of 6.4% and3.8%, respectively. Assume that the returns are approximatelynormally distributed. Using normal probability calculations andcomplete sentences, give your assessment of the likelihood ofgetting, on one hand, a negative return and on the other, a returnabove 10% with these funds. You may choose to use excel normaldistribution formulas, but if you do, give the explicit formulas.Offer some remarks about your possible investment approach.

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3.7 Ratings (329 Votes)
Assumining that the investments are independentwe haveusing absolute termsWe want to know the probability of collectively    See Answer
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