You can invest (A ) in a domestic equity fund , (B ) in a high yield bond fund , or (C) in a mutual fund that invests 70 % in domestic equity and 30% in high yield bonds. The table below shows expected return , standard deviations , the risk -free rate , and the correlation coefficient between stock and bonds .

Asset Class E[R]

Dom Equity 12% 16%

Bond Fund 7% 7.5%

Risk Free 2% 0

Correlation 0.7

Which fund would you choose?