Final answer:
In terms of mutual funds, a small-cap fund tends to have the highest standard deviation because it invests in smaller, less established companies that are subject to higher volatility and risk.
Step-by-step explanation:
When analyzing mutual funds and their associated risks, standard deviation is used as a key measure of a fund's volatility. A mutual fund with a high standard deviation indicates a higher level of risk and larger fluctuations in value. Among the options provided:A specialized fund concentrating in public utility stocks tends towards lower volatility due to the stable demand for utilities.A balanced fund invests in a mix of equities and fixed-income securities, aiming for moderate risk and return.A small-cap fund typically has a higher standard deviation as it invests in smaller, less established companies with higher growth potential but also more risk.
A large-cap fund invests in well-established companies with typically lower volatility compared to small-cap investments.Therefore, the mutual fund with the highest standard deviation, hence the most likely to experience higher volatility, is a small-cap fund (C).The mutual fund with the highest standard deviation is most likely the specialized fund concentrating in public utility stocks. Standard deviation is a measurement of the volatility or risk associated with an investment. A specialized fund concentrating in a specific sector, such as public utility stocks, is likely to have higher fluctuations in value compared to balanced funds, small-cap funds, or large-cap funds.