I come along and offer you what I deem a better investment opportunity. Give me $1,000 and in one year youll get back one of the following outcomes with the probability for each outcome. 10% chance of getting back $100, 40% chance of getting back $700, 40% chance of getting back $1,400, and 10% chance of getting back $2,000.

a. What is your expected return from this investment?

b. What is your risk (standard deviation) from this investment?

c. Whose offer would you accept, mine or hers? Explain.