Question

Over the past 10 years, five mutual funds all had the same mean rate of return. The standard deviations for each of the five mutual funds are shown below.
Capital Investment 5.6%; Vanity: 9.4%, Global Advisor: 8.2%; International Equities: 7.8%, Nomad: 6.4%
Which mutual fund was least consistent in rate of return?
A. Capital Investment
B. Nomad
C. Vanity
D, International Equities
E. Global Advisor

Answer 1

Answer:

C. Vanity

Step-by-step explanation:

As each of the five mutual funds have same mean rate of return, we go for standard deviation of the rate of return to judge which one has the least consistency among the five.  

We know that standard deviation is a measure for variation in a data-set. So more the standard deviation of a data, more is the variation in the data-set and less is the consistency of the data-set.

Here, among the given five mutual fund, we see that "Vanity" has the highest standard deviation (9.4%) in rate of return.  So the mutual fund "Vanity" has the least consistency.

Answer 2

Answer:

A) Capital Investmen

Step-by-step explanation: