Investment A has an expected return of 15% per year, while Investment B has an expected return of
12% per year. A rational investor will choose
A) Investment A if A and B are of equal risk.
B) Investment A because of the higher expected return.
C) Investment B because a lower return means lower risk.
D) Investment A only if the standard deviation of returns for A is higher than the standard
deviation of returns for B.
A
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