Over the last 10 years four mutual funds all had the same mean rate of return, 12%. These mutual funds had different standard deviations. The standard deviations for Mutual Fund A 8%, Mutual Fund B 6%, Mutual Fund C 4%, Mutual Fund D 9%. Which mutual fund investment is the most consistent in rate of return?

(A) Together Fund

(B) All for One Fund

(C) Co-joined Investments

(D) Mutual Money

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Janiya Drake

10 May, 06:43

Over the last 10 years four mutual funds all had the same mean rate of return, 12%. These mutual funds had different standard deviations. The standard deviations for Mutual Fund A 8%, Mutual Fund B 6%, Mutual Fund C 4%, Mutual Fund D 9%. Which mutual fund investment is the most consistent in rate of return?

(A) Together Fund

(B) All for One Fund

(C) Co-joined Investments

(D) Mutual Money

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Answers (1)

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Malaki Gillespie · Answer 1

(C) Co-joined Investments

Explanation:

As it has a ewer standard deviation than their peers.

It is a more reliable option if the investor is more risk averse.

At more standard deviation, there is more change of both, a higher return than expected or a lower return than expected. Therefore, a more risk-averse will go into less standard deviation while another who is willingly to take the risk will go with another fund which deviation is higher.