Risk-return profile of two mutual funds for investment

Assignment Help Financial Management
Reference no: EM131504278

You are considering the risk-return profile of two mutual funds for investment. The relatively risky fund promises an expected return of 7.4% with a standard deviation of 13.5%. The relatively less risky fund promises an expected return and standard deviation of 3.8% and 7.7%, respectively. Assume that the returns are approximately normally distributed.

a. 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.)

Riskier fund  

Less risky fund

b. Calculate the probability of earning a return above 8.3% for each fund. (Round "z" value to 2 decimal places and final answer to 4 decimal places.)

Riskier fund

less risky fund

Reference no: EM131504278

Questions Cloud

Break-even point in unit sales using the equation method : Solve for the company’s break-even point in unit sales using the equation method.
Decide between two mobile phone carriers : You are trying to decide between two mobile phone carriers.
What is present value of payments-payments are annuity due : What is the present value of the payments if the payments are an annuity due?
Company be over the depreciable life of the equipment : What will the yearly after-tax depreciation benefit to the company be over the depreciable life of the equipment?
Risk-return profile of two mutual funds for investment : You are considering the risk-return profile of two mutual funds for investment. calculate the probability of earning a negative return for each fund.
What will be the adjusted total cash flow from the sale : What will be the adjusted total cash flow (ATCF) from the sale of the machining tool?
Cameron balance sheet-what is net working capital : what is Cameron Inc's Net Working Capital?
What is the interest rate on this loan : Imagine you are discussing a loan with a somewhat unscrupulous lender. What is the interest rate on this loan?
The required returns of investors in common stock : What effect do increasing inflation expectations have on the required returns of investors in common stock?

Reviews

Write a Review

Financial Management Questions & Answers

  How much in new savings will frank have

How much in new savings will Frank have available at age 65 before subsequent withdrawals? How much will he have left at age 90? What is the present value of that sum at age 65

  Higher subsequent returns

You analyzed the returns of a sample of stocks. You found that, on average, the firms with high E/P ratios have higher subsequent returns. (i) Discuss an explanation for this pattern that is consistent with the EMH. (ii) Discuss an explanation that i..

  Amount of the guaranteed coupon and the participation rate

You are a banker considering the issuance of a guaranteed note with stock index participation for a client. The current yield curve is flat at 4 percent for all maturities. Your supervisor asks you to compute the “fair” participation rate that would ..

  What is the company receivables turnover and days sales

What is the company's receivables turnover? What is the company's days' sales in receivables?

  Calculate its weighted average cost of capital

Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital.

  Company pension fund management division

How much monSam Strother-Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of company pension fund management division

  Determine the rate of return of project using the data

Determine the Rate of Return (ROR) of a project using the data below:

  What is the delivered price of the living room set

Levin Furniture buys a living room set with a $4,000 list price and a 55% trade discount. Freight (FOB shipping point) of $50 is not part of the list price. What is the delivered price (including freight) of the living room set, assuming a cash disco..

  Compute the net present value of the two alternatives

Assuming that you desire a 10 percent return on your initial investment, compute the net present value of the two alternatives and evaluate their relative attractivenes.

  Discuss how sensitivity analysis

Discuss how sensitivity analysis can be utilized in cost control using examples when preventative or detective objective measure values are not available.

  How are capital and working capital different

How are capital and working capital different? - How are capital and working capital different?- What is leverage, and how does it work? What is the main concern about using it?

  Cash and cash equivalents balance

What balance should Marin report as its “Cash and cash equivalents” balance at April 30, 2017?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd