Q6- according to the following information, which investment consider the possible choice for risk aversion investors, risk lover investors, and risk-neutral investors? (Hint: before you decide which investment suitable for each investor, you need to calculate the standard deviation and expected payoff) Payoff $1000 $300 $0 Stock A Probability 30% 50% 20% Payoff $200 $150 Stock B Probability 50% 50% Payoff $1000 $600 $250 Stock C Probability 20% 60% 20% Q5- Assume the company can experience the following return with the following probability Scenario A B probability 0.2 0.3 0.1 ? Expected return +30% +15% -10% -20% D i- ii- iii- iv- Compute the expected return. Compute the expected value of $2000 investment over a coming year. Compute the standard deviation of the percentage return over the coming year If the risk-free return is 7 percent, what is the risk premium for a stock market investment? Q3 - Which of the investments in the following table would be most attractive to a risk-averse investor? How would your answer differ if the investor was described as risk-neutral and risk lover? Investment Y Z Expected value 75 100 100 200 Variance 100 100 400 2500 A Q4. Consider an investment that pays off $800 or $1,400 per $1,000 invested with equal probability. Suppose you have $1,000 but are willing to borrow to increase your expected return. What would happen to the expected value and standard deviation of the investment if you borrowed an additional $1,000 and invested a total of $2,000? What if you borrowed $2,000 to invest a total of $3,000