Investments a and B Both Offer an Expected Rate of Return

question 45

Multiple Choice

Investments A and B both offer an expected rate of return of 12%. If the standard deviation of A is 20% and that of B is 30%, then investors would:

• A) Prefer A to B
• B) Prefer B to A
• C) Prefer a portfolio of A and B
• D) Cannot answer without knowing investor's risk preferences

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Definitions:

Organic Product

Any compound containing carbon atoms that is produced from organic reactions involving organic compounds.

Organic Product

A molecule or compound that has been synthesized through a reaction involving organic (carbon-based) precursors.

Cyclobutanone

A cyclic ketone compound consisting of a four-carbon ring structure with a ketone functional group.

Single Reagent

A specific chemical substance used alone in a reaction to achieve a particular synthesis or transformation.