Given a Choice Between Two Investments with the Same Expected

question 46

Multiple Choice

Given a choice between two investments with the same expected payoff:

• A)Most people will choose the one with the lower standard deviation
• B)Most people will opt for the one with the higher standard deviation
• C)Most people will be indifferent since the expected payoffs are the same
• D)Most people will calculate the variance to assess the relative risks of the two choices

---

Definitions:

Regulatory Policies

Rules or directives formulated by a governing body to regulate activities within specific areas or industries for public benefit.

Low Down-payment Loans

Loan types that require a smaller initial payment from the borrower, often used in the context of home mortgages.

Interest Rate Policy

A component of monetary policy, often set by a central bank, that determines the level of interest rates to influence economic activity.

Federal Regulations

Rules set by the federal government to control and guide the practices of businesses, individuals, and other organizations within the country.