Consider These Two Investment Strategies Strategy ___ Is the Dominant Strategy Because _________

question 12

Multiple Choice

Consider these two investment strategies: $$\begin{array} { l c c } & \text { Strategy 1 } ( \% ) & \text { Strategy 2 } ( \% ) \\\hline \text { Expected return } & 6 & 9 \\\text { Standard deviation } & 0 & 4 \\\text { Highest return } & 6 & 15 \\\text { Lowest return } & 6 & 6\end{array}$$
Strategy ___ is the dominant strategy because _________.

• A) 1,it is riskless
• B) 1,it has the highest reward/risk ratio
• C) 2,its return is at least equal to Strategy 1 and sometimes greater
• D) 2,it has the highest reward/risk ratio
• E) both strategies are equally preferred.

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Definitions:

Cirrhosis

A late stage of scarring (fibrosis) of the liver caused by many forms of liver diseases and conditions, such as hepatitis and chronic alcoholism.

Chronic Alcohol Use

A pattern of alcohol consumption that is consistent and prolonged, leading to health problems and addiction.

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A condition characterized by an abnormally slow heart rate, typically defined as fewer than 60 beats per minute in adults.

At-Risk Alcohol Use

Consuming alcohol in amounts or patterns that increase the likelihood of causing harm to one’s health and well-being.