Which of the Following Projects Would a Risk-Averse Investor Choose

question 14

Multiple Choice

Which of the following projects would a risk-averse investor choose?

• A) an ENPV of $2 million and a standard deviation of $50,000.
• B) an ENPV of $2 million and a standard deviation of $200,000.
• C) an ENPV of $2 million and a standard deviation of $400,000.
• D) an ENPV of $1 million and a standard deviation of $200,000.
• E) an ENPV of $3 million and a standard deviation of $2,500,000.

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Definitions:

Governmental Fund

A type of fund used by governmental entities to account for revenues, expenditures, and balances that are not accounted for in proprietary or fiduciary funds.

Bonds Payable

A liability account that represents the amounts owed by an entity to bondholders that must be repaid at a future date.

Governmental Fund Financial Statements

These are financial statements that report on the fiscal condition and the results of operations for governmental funds of a state, municipality, or similar entity.