Given Investments a and B with the Following Risk Return

question 36

Multiple Choice

Given investments A and B with the following risk return characteristics,which one would you prefer and why?
$\begin{array}{ccc}\text { Investment } & \text { Expected Retumn } & \begin{array}{c}\text { Standard Deviation } \\\text { of Expected Returns }\end{array} \\\hline \mathrm{A} & 12.2 \% & 7 \% \\\mathrm{R} & 8.8 \% & 5 \%\end{array}$

• A) Investment A because it has the highest expected return.
• B) Investment A because it has the lowest relative risk.
• C) Investment B because it has the lowest absolute risk.
• D) Investment B because it has the lowest coefficient of variation.
• E) Investment A because it has the highest coefficient of variation.

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