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:7.9%;
​Vanity:10.8​%;
Global​ Advisor: 5.8​%;
International​ Equities:9.5%;
​Nomad:8.4​%
Which mutual fund was least consistent in rate of​ return?

Answer 1

The Vanity mutual fund, with a standard deviation of 10.8%, was the least consistent in rate of return over the past 10 years among the five mutual funds listed.

Step-by-step explanation:

The mutual fund that was least consistent in rate of return among the five mutual funds listed is the one with the highest standard deviation. Standard deviation measures how much variation or dispersion from the average exists. A higher standard deviation indicates that the returns vary more widely from the mean (average) return, which means less consistency.

Looking at the standard deviations given for each mutual fund:

• Capital​ Investment: 7.9%
• Vanity: 10.8%
• Global​ Advisor: 5.8%
• International​ Equities: 9.5%
• Nomad: 8.4%

The Vanity mutual fund had the highest standard deviation at 10.8%. Therefore, the Vanity mutual fund was the least consistent in rate of return over the past 10 years compared to the other mutual funds listed.