Rosa Walters is considering investing $10,000 in two mutual funds. The anticipated returns from price appreciation and dividends (in hundreds of dollars) are described by the following probability...

Rosa Walters is considering investing
$10,000 in two mutual funds. The anticipated
returns from price appreciation and
dividends (in hundreds of dollars) are
described by the following probability
distributions:

Mutual Fund A:



Returns


Probability


  –4                       0.2
    8                       0.5
   10                      0.3

Mutual Fund B:



Returns


 Probability


   –2                       0.2
    6                        0.4
    8                        0.4
a) Compute the mean, variance and standard
deviation associated with the returns for
each mutual fund.
b) Which investment would provide Rosa
with the higher expected return?
c) In which investment would the element of
risk be less (that is, which probability has
the smaller variance?)