You Are Going to Invest All of Your Funds in One

question 40

Multiple Choice

You are going to invest all of your funds in one of three projects with the following distribution of possible returns:
Project 1 Project 2
Standard Deviation 12% Standard Deviation 19.5%
Probability Return Probability Return
50% Chance 20% 30% Chance 30%
50% Chance -4% 40% Chance 10%
30% Chance -20%
Project 3
Standard Deviation 12%
Probability Return
10% Chance 30%
40% Chance 15%
40% Chance 10%
10% Chance -21%
If you are a risk-averse investor,which one should you choose?

• A)Project 1
• B)Project 2
• C)Project 3

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Definitions:

Conscience Orientation

A perspective focused on ethics, morality, and the internalized sense of right and wrong.

Authoritative

Refers to a parenting style characterized by high responsiveness and high demands, considered one of the most effective approaches.

Authoritarian

Describes a governing system with strict obedience to authority at the expense of personal freedom.

Permissive

A parenting or leadership style characterized by low demands with high responsiveness, where adults are more lenient and may avoid setting firm boundaries.