You plan to invest $$1,000$ in a corporate bond fund or in a common stock fund. The information to the right about the annual return $($per $$1,000)$ of each

of these investments under different economic conditions is available, along with the probability that each of these economic conditions will occur.

Complete parts $($a$)$ through c below. a$.$ Compute the expected return for the corporate bond fund and for the common stock fund.

The expected return for the corporate bond fund is $59\mathrm{.}4.$

$($Round to two decimal places as needed.$)$

The expected return for the common stock fund is $63\mathrm{.}01.$

$($Round to two decimal places as needed.$)$

b$.$ Compute the standard deviation for the corporate bond fund and for the common stock fund.

The standard deviation for the corporate bond fund is $49\mathrm{.}55.$

$($Round to two decimal places as needed.$)$

The standard deviation for the common stock fund is $204\mathrm{.}60.$

$($Round to two decimal places as needed.$)$

c$.$ Would you invest in the corporate bond fund or the common stock fund? Explain.

Based on the expected value, the common stock fund should be chosen. Since the standard deviation for the common stock fund is more than three times greater than that for the corporate bond fund, the common stock fund

is riskier than

the corporate bond fund and an investor

should carefully weigh the risk when making$$a

decision.