Consider These Two Investment Strategies Strategy __________ Is the Dominant Strategy Because __________

question 45

Multiple Choice

Consider these two investment strategies: $\begin{array}{cc}& \text { Strategy1\%} &\text { Strategy2\%} \\ \text { Expected return } &6&9\\ \text { Standard deviation } &0&4\\ \text {Highest return } &6&15\\ \text { Lowest return } &6&6\\\end{array}$

Strategy __________ is the dominant strategy because __________.

• A) 1; it is riskless
• B) 1; it has the highest reward/risk ratio
• C) 2; its return is greater than or equal to the return of Strategy 1
• D) 2; it has the highest reward/risk ratio
• E) Both strategies are equally preferred.

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Definitions:

Margin Error

The highest degree to which the outcomes from a sample are anticipated to vary from the actual value of the population.

Sample Size

Refers to the number of observations or data points that are collected and used for statistical analysis.

P-values

The odds of observing test results as extreme or more extreme than the actual outcomes, under the presumption that the null hypothesis is accurate.

One-sided

Refers to a type of hypothesis test or confidence interval where the alternative hypothesis targets a specific direction of effect.