The Return of Two Different Stocks Has the Following Distribution

question 38

Multiple Choice

The return of two different stocks has the following distribution depending on the market conditions. To decide on which is the best investment for an investor who prefers the highest average return bu the lowest risk, which of the following would be the most appropriate analysis to perform?
$$\begin{array} { c c c l } \hline \text { Market Condition } & \text { Probability } & \text { Return of StockA } & \text { Return of Stock B } \\\hline \text { Bull } & 0.4 & \$ 200 & - \$ 200 \\\text { Stable } & 0.3 & \$ 100 & \$ 150 \\\text { Bear } & 0.3 & - \$ 100 & \$ 400 \\\hline\end{array}$$

• A) compute the coefficient of variation
• B) perform a two-way ANOVA
• C) perform a multiple linear regression
• D) set up the payoff table

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Definitions:

Staging

The process of classifying the extent and spread of diseases like cancer within the body, often determining the choice of therapies and the prognosis.

Cancer Cells

Abnormal cells that divide uncontrollably and have the potential to invade and spread to other parts of the body.

Chemotherapy

A method of treating cancer that involves administering one or more chemotherapy drugs according to a specific, standardized protocol.

Immune Response

The body's defense mechanism against foreign substances or pathogens, involving various cells and proteins.