Instruction 17-4
the Following Information Is from Two Investment Opportunities

question 31

Multiple Choice

Instruction 17-4
The following information is from two investment opportunities.
$$\begin{array} { l c c } & A & B\\\text { Expectedmonetary } & \$ 900 & \$ 600 \\\text { value }\\\text { standarddeviation } & 100 & 50 \end{array}$$
-Referring to Instruction 17-4,which investment has the optimal coefficient of variation?

• A) Investment A
• B) Investment B
• C) The investments are equal.
• D) It cannot be determined.

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Definitions:

Income Tax Rate

The percentage of earnings taxed on entities or individuals.

Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated as the present value of future cash flows divided by the initial investment cost.

Investment Projects

Initiatives undertaken by businesses or individuals involving the allocation of resources with the expectation of future returns.

Cash Outflows

Money spent or costs incurred by a business or individual, resulting in a decrease in cash reserves.