Investment A has an expected return of 14% with a standard deviation of 4%, while investment B
has an expected return of 20% with a standard deviation of 9%. Therefore,
A) rational investors could pick either A or B, depending on their level of risk aversion.
B) a rational investor will pick investment B because the return adjusted for risk (20% - 9%) is
higher than the return adjusted for risk for investment A ($14% - 4%).
C) a risk averse investor will definitely select investment A because the standard deviation is
lower.
D) it is irrational for a risk-averse investor to select investment B because its standard deviation
is more than twice as big as investment A's, but the return is not twice as big.
A
You might also like to view...
Checks, when accepted, are said to be certified
a. True b. False Indicate whether the statement is true or false
You should send an e-mail message to a disgruntled client, instead of calling.
Answer the following statement true (T) or false (F)
DMTF stands for ________
A) Divisible Markup Task Force B) Durable Management Task Force C) Distributed Management Task Force D) Descriptive Manager Tasking Force
Conclusions drawn from a sample survey
a. apply only to the sample. b. apply to any population. c. apply only to the sampled population. d. apply to the target population.