Question
Question 5 (1 point) A risk averse investor is consideing investing in one of the following three stocks. The rate of return of each stock
Question 5 (1 point)
A risk averse investor is consideing investing in one of the following three stocks. The rate of return of each stock along with their probabilities are provided in the table below.
| Scenario | Return of Stock A | Return of Stock B | Return of Stock C |
| Pessimistic | 1% | 7% | 0% |
| Most Likely | 7% | 7% | 7% |
| Optimistic | 18% | 8% | 11% |
Which statement is true?
| a | The investor should invest in stock B because it has the lowest coefficient of variation |
| b | The investor should invest in stock B because it has the lowest standard deviation |
| c | The expected return of stock C is 7.25% |
| d | The investor should invest in stock A because it has the higher expected return |
Question 6 (1 point)
A risk averse investor is consideing investing in one of the following three stocks. The rate of return of each stock along with their probabilities are provided in the table below.
| Scenario | Return of Stock A | Return of Stock B | Return of Stock C |
| Pessimistic | 1% | 7% | 0% |
| Most Likely | 7% | 7% | 7% |
| Optimistic | 18% | 8% | 11% |
What is the standard deviation of return of stock A?
| a | 8.7% |
| b | 6.14% |
| c | 17% |
| d | 7% |
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Meetings Expositions Events And Conventions An Introduction To The Industry
Authors: George Fenich
5th Edition
0134735900, 9780134735900
