Risk preferences Sharon Smith, the financial manager for Barnett Corporation 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 expected returns and standard deviations of the investments are as follows ? 3. If Sharon were risk neutral, which investment would she select? Explain why b. If she were risk overse, 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 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 you are certain she will not choose? a. If Sharon were risk i Data Table - X A Investment z B. Investment C. Investment (Click on the icon here in order to copy the contents of the data table below OD. None of the thre into a spreadsheet) b. If she were riskave Expected Standard Investment return deviation 14% 7% O A Investment Y 14% 8% OB Investment Z 2 14% 9% OC. Investment X OD. None of the thre Print Done c. If she were risk seeking which investments might she select? (Select the best answer below. A Investment X Risk preferences Sharon Smith the financial manager for Barnett Corporation, wishes to select one of three prospective investments X Y and Z Assume that the measureignisk Sharon cares about is an assets standard deviation The 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 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 you are certain she will not choose? a. If Sharon were risk neutral, which investment might she seled? (Choose all that apply.) A. Investment z B. Investment C. Investment D. None of the three investments b. If she were risk averse, which investment might she select? (Select the best answer below.) O A Investment OB. Investment z OC. Investment X OD. None of the three investments c. If she were risk seeking, which investments might she select? (Select the best answer below) O A Investment OB. None of the three investments Click to select your answer Risk preferences Sharon Smith, the financial manager for Barnett Corporation 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 expected returns and standard deviations of the investments are as follows II 3. 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 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 you are certain she will not choose? b. If she were risk averse, which investment might she select? (Select the best answer below.) O A. Investment Y OB. Investment Z OC. Investment OD. None of the three investments c. If she were risk seeking, which investments might she select? (Select the best answer below) O A Investment X B. None of the three investments OC. Investment 2 OD. Investment d. Suppose a fourth investment, W, is available. It offers an expected return of 15%, and it has a standard deviation of 9%. If Sharon is nsk averse, can you say which investment she will choose? Why or why not? Are there any investments that you are certain she will not choose? (Select the best answer below) O AllSharon were risk averse, it is not clear whether she would prefer investment Wor Z. From part (b), Sharon prefers Z to X and Y, hinand Whea husha watoto na Hin The Chenoforova hranandan Click to select your answer Risk preferences Sharon Smith the financal manager for Barnett Corporation, wishes to select one of three prospective investments XY and 2. Assume that the measure of risk Sharon cares about is an asset's standard deviation The 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 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 you are certain she will not choose? OD. Investment d. Suppose a fourth investment, W, is available It offers an expected 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? Ate there any investments that you are certain she will not choose? (Select the best answer below) O A. Sharon were risk averse, it is not clear whether she would prefer investment WorZ From part (b), Sharon prefers Z to X and Y, but investment W has a higher expected retum and standard deviation. Thus, Sharon's preference between W and Z will depend on whether the extra return expected on Wis sufficient compensation for the extra nisk in other words, Sharon's choice will depend on her risk tolerance (ie, her degree of risk aversion) B. Sharon were risk averse, it is not clear whether she would prefer investment W or X From part (b), Sharon prefers X to Y and Z. but investment W has a higher expected retum and standard deviation Thus, Sharon's preference between Wand X will depend on whether the extra return expected on W is sufficient compensation for the extra risk. In other words, Sharon's choice will depend on her risk tolerance (le, her degree of risk aversion) OC. If Sharon were risk averse, it is not clear whether she would prefer investment WorX From port (b), Sharon prefers X to Y and Z, but investment has a lower expected return and standard deviation. Thus, Sharon's preference between Wand X will depend on whether the return expected on Wis sufficient compensation for the extra investment. In other words Sharon's choice will depend on her risk tolerance (ie, her degree of risk aversion) OD. If Sharon were risk averse, it is not clear whether she would prefer investment Wory. From part (b), Sharon prefers Y to X and 2, but investment has a higher expected return and standard deviation. Thus, Sharor's preference between Wand Y will depend on whether the extra return 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) Click to select your