Assume That Two Investment Opportunities Have Identical Expected Values of $100,000

question 37

Multiple Choice

Assume that two investment opportunities have identical expected values of $100,000. Investment A has a variance of 25,000, while investment B's variance is 10,000. We would expect most investors (who dislike risk) to prefer investment opportunity:

• A) A because it has less risk.
• B) A because it provides higher potential earnings.
• C) B because it has less risk.
• D) B because of its higher potential earnings.