Question
1. You have collected and partially analyzed the following data about three different stocks in MSM Stock 1 Standard Deviation of returns =12% Probability Return
1. You have collected and partially analyzed the following data about three different stocks in MSM
Stock 1 Standard Deviation of returns =12% | |
Probability | Return |
50% Chance | 20% |
50% Chance | -4% |
Stock 2 Standard Deviation of returns =19.5% | |
Probability | Return |
30% Chance | 30% |
40% Chance | 10% |
30% Chance | -20% |
Stock 3 Standard Deviation of returns =12% | |
Probability | Return |
10% Chance | 30% |
40% Chance | 15% |
40% Chance | 10% |
10% Chance | -21% |
Instructions: Assuming you are a rational investor and you plan to invest all your funds in one of the above stocks, which one would achieve your goal to balance risk with expected return.
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