IInvestments a and B Both Offer an Expected Rate of Return

question 82

Multiple Choice

IInvestments A and B both offer an expected rate of return of 12.The standard deviation of A is 30 percent and that of B is 20 percent.If an investor wishes to invest in either A or B, then the investor should

• A)prefer A to B.
• B)prefer B to A.
• C)prefer a portfolio including both A and B.
• D)The answer cannot be determined without knowing investors' risk preferences.

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Definitions:

Gibbons

A group of primates known for their ability to brachiate and their distinctive whooping calls. They are smaller than great apes and live in the forests of Southeast Asia.

Spider Monkeys

A type of New World monkey known for its long limbs and tail, which it uses for brachiation through the forest canopy.

Common Ancestor

The most recent individual from which all organisms in a group directly descend.

Inhabited

Occupied by residents, referring to a place where living organisms, including humans, live and grow.