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5. Two assets have the following expected returns and standard deviations when the risk-free rate is 5%: Asset A: Expected return = 10% & SD

5. Two assets have the following expected returns and standard deviations when the risk-free rate is 5%:

Asset A: Expected return = 10% & SD = 20%

Asset B: Expected return = 15% & SD = 27% An investor with a risk aversion of A = 3 would find that _________________ on a risk return basis.

PLEASE PROVIDE MATHEMATICAL EXPLANATION BEHIND ANSWER CHOICE

A. only Asset A is acceptable B. only Asset B is acceptable C. neither Asset A nor Asset B is acceptable D. both Asset A and Asset B are acceptable

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