An investor is considering two different mutual funds:

Fund A has an expected return of $9\%$ and a standard deviation of returns of

$10\%.$

Fund B has an expected return of $11\%$ and a standard deviation of returns of

$15\%.$

If the risk$-$free rate is $2\%,$ which mutual fund provides a better risk$-$return trade$-$

off?

Fund $B,$ because it has a higher expected return.

Fund B$,$ because it has a higher Sharpe ratio.

Fund A$,$ because it has a higher Sharpe ratio.

Fund $A,$ because it is less risky.