A firm is evaluating the riskiness of two capital budgeting projects. The following table summarizes the NPV & associated (NPV) probabilities for various outcomes of the two projects

Net Present Values

ProbabilityProject A Project B

0.25 (Optimistic) -$5,000$0

0.50 (Most likely) $4,000 $2,000

0.25 (Pessimistic) $10,000$8,000

Using the above information, the projects can best be characterized relative to one another by the statement

1. Project A is more risky than Project B
2. Project B is more risky than Project A
3. Since Project A has a higher expected NVP, it should be chosen
4. Since Project B has a higher standard deviation, it is more risky & should not be chosen