SOLUTION: 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 re

Question 880970: 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. Use Table 1.
a-1. Calculate the probability of earning a negative return for each fund. (Round "z" value to 2 decimal places and final answer to 4 decimal places.)
Probability
Riskier fund
Less risky fund
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b-1. Calculate the probability of earning a return above 8% for each fund. (Round "z" value to 2 decimal places and final answer to 4 decimal places.)
Probability
Riskier fund
Less risky fund

Answer by binette(1) (Show Source): You can put this solution on YOUR website!

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