You are trying to decide which mutual fund to invest in.There are many choices,so you begin by analyzing just two funds,the Emerging Markets Fund (EMF)and the Small Stock Fund (SSF).Both funds have an expected return of 10%.EMF has a standard deviation or 20%,while SSF has a standard deviation of 22%.From this information can you conclude that either EMF or SSF is an efficient portfolio? Can you say that either portfolio is inefficient (i.e.,does not maximize return for a given risk level?

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The Answer of You are trying to decide which mutual fund to invest in.There are many choices,so you begin by analyzing just two funds,the Emerging Markets Fund (EMF)and the Small Stock Fund (SSF).Both funds have an expected return of 10%.EMF has a standard deviation or 20%,while SSF has a standard deviation of 22%.From this information can you conclude that either EMF or SSF is an efficient portfolio? Can you say that either portfolio is inefficient (i.e.,does not maximize return for a given risk level?

You Are Trying to Decide Which Mutual Fund to Invest