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Risk preferences Sharon Smith, the financial manager for Barnett Corporation, wishes to select one of three pr expected returns and standard deviations of the investments are as follows: a. If Sharon were risk neutral, which investment would she select? Explain why. b. If she were risk averse, which investment would she select? Why? c. If she were risk seeking, which investments would she select? Why? d. Suppose a fourth investment, W, is available. It offers an expected return of 18%, and it has a standard deviation you are certain she will not choose? a. If Sharon were risk neutral, which investment might she select? (Select the best answer below.) A. Investment X B. Investment Z. C. Investment Y D. None of the three investments b. If she were risk averse, which investment might she select? (Select the best answer below.) A. Investment X B. Investment Y. OOO C. Investment z D. None of the three investments c. If she were risk seeking, which investments might she select? (Choose all that apply) A investment Y B. Investment X financial manager for Barnett Corporation, wishes to select one of three prospective investments: X, Y, and Z. Assume that the measure of rice ons of the investments are as follows: investment would she select? Explain why. estment would she select? Why? vestments would she select? Why? is available. It offers an expected return of 18%, and it has a standard deviation of 9%. If Sharon is risk averse, can you say which investment she uch investment might she select? (Select the best answer below.) nents. h investment might she select? (Select the best answer below.) estments which investments might she select? (Choose all that apply.) poration, wishes to select one of three prospective investments: X, Y, and Z. Assume that the measure of risk Sharon cares about is an asset's standard deviation. The xplain why my? retum of 18%, and it has a standard deviation of 9%. If Sharon is risk averse, can you say which investment she will choose? Why or why not? Are there any investments that (Select the best answer below.) (Select the best answer below.) siect? Choose that apply nd it has a standard deviation of 9%. If Sharon is risk averse, can you say Data Table Flick on the icon here in order to copy the contents of the data table below ho a spreadsheet.) Investment Y Z Expected return 17% 17% 17% Standard deviation 7% 8% 9% Print Done all that apply.) a. If Sharon were risk neutral, which investment would she select? Explain why. b. If she were risk averse, which investment would she select? Why? c. If she were risk seeking, which investments would she select? Why? d. Suppose a fourth investment, W, is available. It offers an expected return of 18%, and it has a stand you are certain she will not choose? a. If Sharon were risk neutral, which investment might she select? (Select the best answer below.) A. Investment B. Investment 2 C. Investment nt Y D. None of the three investments. b. If she were risk averse, which investment might she select? (Select the best answer below.) A. Investment B. Investment Y. OC. Investment z OD. None of the three investments c. If she were risk seeking, which investments might she select? (Choose all that apply.) O A Investment B. Investment X Click to select your answer. esc 20 F3 % b. If she were risk averse, which investment would she select? Why? c. If she were risk seeking, which investments would she select? Why? d. Suppose a fourth investment, W, is available. It offers an expected return of 18%, and it you are certain she will not choose? c. If she were risk seeking, which investments might she select? (Choose all that apply.) O A. Investment Y. OB. Investment X O C. Investment z. OD. None of the three investments. d. Suppose a fourth investment, W, is available. It offers an expected return of 15%, and it has you are certain she will not choose? (Select the best answer below.) O A. # Sharon were risk averse, it is not aldar whether she would prefer investment Wor Z. between W and Z will depend on whether the extra return expected on W is sufficient com OB. If Sharon were risk averse, it is not clear whether she would prefer investment W or Y. F. between W and Y will depend on whether the extra return expected on W is sufficient com OC. Sharon were risk averse, it is not clear whether she would prefer investment W or X. Fr between Wand X will depend on whether the extra return expected on W is sufficient com OD. I Sharon were risk averse, it is not clear whether she would prefer investment W or X. From between Wand X will depend on whether the return expected on W is sufficient compensa Click to select your answer. esc F2 FB OD. None of the three investments. d. Suppose a fourth investment, W, is available. It offers an expected return of 15%, and it has a standard deviation of 9%. you are certain she will not choose? (Select the best answer below.) O A. If Sharon were risk averse, it is not clear whether she would prefer investment W or Z. From part (b), Sharon prefers between W and Z will depend on whether the extra return expected on W is sufficient compensation for the extra risk B. If Sharon were risk averse, it is not clear whether she would prefer investment Wory. From part (b), Sharon prefers between W and Y will depend on whether the extra return expected on W is sufficient compensation for the extra risk. O c. If Sharon were risk averse, it is not clear whether she would prefer investment W or X. From part (b), Sharon prefers between W and X will depend on whether the extra return expected on W is sufficient compensation for the extra risk. OD. If Sharon were risk averse, it is not clear whether she would prefer investment W or X. From part (b), Sharon prefers X between W and X will depend on whether the return expected on W is sufficient compensation for the extra investment. Click to select your answer. ed return of 15%, and it has a standard deviation of 9%. If Sharon is risk averse, can you say which investment she will choose? Why or why not? Are there any investments that prefer investment W or Z. From part (b), Sharon prefers to X and Y, but investment W has a higher expected return and standard deviation. Thus, Sharon's preference expected on Wis sufficient compensation for the extra risk. In other words, Sharon's choice will depend on her risk tolerance (ie, her degree of risk aversion) d prefer investment Wory. From part (b), Sharon prefers Y to X and Z, but investment W has a higher expected return and standard deviation. Thus, Sharon's preference expected on W is sufficient compensation for the extra risk. In other words, Sharon's choice will depend on her risk tolerance (ie, her degree of risk aversion). uld prefer investment W or X. From part (b), Sharon prefers to Y and Z, but investment W has a higher expected retum and standard deviation. Thus, Sharon's preference expected on W is sufficient compensation for the extra risk. In other words, Sharon's choice wil depend on her risk tolerance (ie, her degree of risk aversion) uld prefer investment W or X. From part (b), Sharon prefers X to Y and Z, but investment W has a lower expected retum and standard deviation. Thus, Sharon's preference acted on W is sufficient compensation for the extra investment. In other words, Sharon's choice will depend on her risk tolerance (in, her degree of risk aversion) 0 $ 9 & 7 8 % 5 6