Question
You are considering purchasing two stocks with the following possible returns and probabilities of occurrence: Investment A Return Probability of Occurence -10% 20% 5 40
You are considering purchasing two stocks with the following possible returns and probabilities of occurrence:
Investment A | Return | Probability of Occurence |
-10% | 20% | |
5 | 40 | |
15 | 30 | |
25 | 10 | |
Investment B | Return | Probability of Occurence |
-5% | 20% | |
5 | 40 | |
7 | 30 | |
39 | 10 |
Which investment has a higher expected return [ Select ] ["Investment B", "Not enough information", "Equal expected returns", "Investment A"] ? Which investment has a higher risk according to standard deviation [ Select ] ["Same risk", "Not enough information", "Investment A", "Investment B"] ? I recommend you use a spreadsheet to answer this question. Which investment is more efficient [ Select ] ["Investment B", "Investment A", "Not enough information", "Equally efficient"] (higher return/risk ratio)?
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