21) You are going to add one of the following three projects to your already well-diversified portfolio. (20 points) PROJECT1 PROJECT2 Standard Standard Probability 50% Chance 50% Chance Beta Probability 30% Chance 40% Chance 30% Chance Return 22% -4% Deviation 12% Return 36% 10.5% -20% Beta 0.8 Deviation 19.5% PROJECT 3 Standard Deviation 12% Probability 10% Chance 70% Chance 20% Chance Return 28% 18% -8% Beta 2.0 Assume the risk-free rate of return is 2% and the market risk premium is 8%. If you are a risk averse investor, which project should you choose? A) Project 1 B) Project 2 C) Project 3 D) Either Project 2 or Project 3 because the higher expected return on project 3 offsets its higher risk