You are comparing stock A to stock B. Given the following information, which one of these two stocks should you prefer and why? Assume that all of your money must be invested in just one type of stocks: you invest everything in either A or B. Rate of Return if State Occurs State of the Economy Probability Stock A Stock B Boom 0.5 20% 18% Recession 0.5 10% 14% Stock B; because it has a higher expected return and appears to be less risky than stock A O Stock A; because it has a higher expected return and appears to be less risky than stock B Stock B; because it has a higher expected return and appears to be just slightly riskier than stock A Stock A; because it has an expected return of 7 % and appears to be riskier O Stock A; because it has a slightly lower expected return but appears to be significantly less risky than stock B