Investment a Has an Expected Return of 15% Per Year,while

question 82

Multiple Choice

Investment A has an expected return of 15% per year,while investment B has an expected return of 12% per year.A rational investor will choose

• A)investment A because of the higher expected return.
• B)investment B because a lower return means lower risk.
• C)investment A if A and B are of equal risk.
• D)investment A only if the standard deviation of returns for A is higher than the standard deviation of returns for B.

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Definitions:

Marginal Costs

The added expense to produce one more item; it can decrease or increase depending on production size and efficiency.

Marginal Benefits

The boost in satisfaction or usefulness derived from the consumption of an additional unit of a good or service.

Rational Individuals

People who make decisions by logically evaluating options based on their preferences and the likely outcomes to maximize their benefit or utility.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of two products that can be produced within a given set of resources, highlighting the trade-offs and opportunity costs.