Based on the Information Given Below, Which of the Investments $\sigma$

question 20

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.

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

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Definitions:

Net Capital

The difference between a company's or country's total assets and its total liabilities, indicating the net value of its capital resources.

Loanable Funds

The market where savers supply funds for loans to borrowers, influenced by the interest rate.

Tax Rebate

A financial refund provided by the government to taxpayers, typically to stimulate the economy or encourage certain behaviors.

Open-Economy Macroeconomic Model

A framework for understanding and analyzing the interactions between a country's economy and the rest of the world, including trade and capital flows.