The Following Table Shows the Expected Value and Variance for 5

question 60

Multiple Choice

The following table shows the expected value and variance for 5 projects a firm can undertake. Which of the following is are) correct if the mean-variance rule is used for the decision?

• A)Project C is preferable to A.
• B)Project E is preferable to B.
• C)Project D is preferable to C.
• D)all of the above
• E)none of the above

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Definitions:

Bond

A fixed-income investment in which an investor loans money to an entity (typically corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.

Premium

In finance, this term refers to the amount by which the price of a bond or stock exceeds its principal or face value, or to an additional payment above the normal cost.

Time

A continuous sequence of events that occurs in an irreversible succession from the past, through the present, to the future.