Based on the Information Given Below, Which of the Investments $\hat { r}$

question 9

Multiple Choice

Based on the information given below, which of the investments would be considered best based on its risk and return relationship? Assume all investors are risk-averse and the investments will be held in isolation, not in a portfolio. Investment
D E F Expected return, $\hat { r}$ 10.0% 18.0% 18.0% Standard deviation, ? 7.0% 12.0% 20.0%

• A)D, because its total risk is lowest.
• B)E, because its coefficient of variation is lowest.
• C)F, because its standard deviation, ?, is highest.
• D)E and F, because the have the same expected return, \(\hat { r}\) .
• E)None of the above.

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Definitions:

Tax Burden

The total amount of taxes paid by an individual or business, expressed as a percentage of income.

Piece Rate Plan

A compensation model where workers are paid a fixed sum for each unit of production completed, rather than an hourly wage.

Teamwork

The collaborative effort of a group to achieve a common goal or complete a task in the most effective and efficient way.

Static Tasks

Work or duties that are consistent and unchanging over time, often repetitive in nature.