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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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