You are going to invest all of your funds in one of three projects with the following distribution of possible returns: (Unit 1)

PROJECT 1			PROJECT 2
Probability	Return	Standard Deviation	Probability	Return	Standard Deviation
50% Chance	20%	12%	30% Chance	30%	19.5%
50% Chance	-4%		40% Chance	10%
			30% Chance	-20%

PROJECT 3

Standard

Probability Return Deviation

10% Chance 30% 12%

40% Chance 15%

40% Chance 10%

10% Chance -21%

If you are a risk averse investor, which one should you choose? (Unit 1)

Project 3 is the best investment. Please explain why that is the case.