Question
Consider the three investments: Investment X: There is a 50% chance that you receive a one year holding period return of 0% and there is
Consider the three investments: Investment X: There is a 50% chance that you receive a one year holding period return of 0% and there is a 50% chance that you receive a one year holding period return of 10%. Investment Y: There is a 33.33% chance that you receive a one year holding period return of 10%, there is a 33.33% chance that you receive a one year holding period return of 15%, and there is a 33.33% chance that you receive a one year holding period return of 20%. Investment Z: There is a 20% chance that you receive a one year holding period return of 90%, there is a 60% chance that you receive a one year holding period return of 95%, and there is a 20% chance that you receive a one year holding period return of 100%. Select the most accurate statement below. a. Investment X is riskier than Investment Y and Investment Z. b. Investment Y is riskier than Investment X and Investment Z. c. Investment Z is riskier than Investment X and Investment Y. d. Investment X has the same risk as Investment Y. e. Investment Y has the same risk as Investment Z. f. Two of the above statements are correct.
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