Which of the following statements is a direct interpretation of two fundamental axioms of Finance?

Investors prefer an investment with lower expected return and higher standard deviation.

Investors prefer an investment with higher expected return and higher standard deviation.

Investors prefer an investment with higher expected return and lower standard deviation.

None of these statements reflect the axioms.

Imagine an investor who receives a diminishing marginal utility from wealth increases. The investor is presented with an investment opportunity as follows:

Invest $$50$ and receive EITHER $$100($with $50\%$ probability$)$ OR receive $$0($with $$50$ probability$).$

Will the investor invest? Why?

Yes. Because Utility of $50$ is greater than Expected Utility of $50.$

Yes. Because Utility of $50$ is lower than Expected Utility of $50$ :

No$.$ Because Utility of $50$ is greater than Expected Utility of $50.$

No$.$ Because Utility of $50$ is lower than Expected Utility of $50.$