You are going to invest all of your funds in one of three projects with the...

 

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You are going to invest all of your funds in one of three projects with the following distribution of possible returns: Probability 50% Chance 50% Chance PROJECT 1 Standard Return Deviation 30% 9% -4% PROJECT 3 Standard Probability Return Deviation 10% Chance 28% 12% 70% Chance 18% 20% Chance -8% Beta 1.5 I Beta 2 Probability 30% Chance 40% Chance 30% Chance PROJECT 2 Standard Return Deviation 36% 9% 10.5% -20% If you are a risk averse investor, which one should you choose? Explain why. Beta 0.8 You are going to invest all of your funds in one of three projects with the following distribution of possible returns: Probability 50% Chance 50% Chance PROJECT 1 Standard Return Deviation 30% 9% -4% PROJECT 3 Standard Probability Return Deviation 10% Chance 28% 12% 70% Chance 18% 20% Chance -8% Beta 1.5 I Beta 2 Probability 30% Chance 40% Chance 30% Chance PROJECT 2 Standard Return Deviation 36% 9% 10.5% -20% If you are a risk averse investor, which one should you choose? Explain why. Beta 0.8

Answer rating: 100% (QA)

As a riskaverse investor you should choose Project 2 Heres why Lower Standard Deviation Project 2 ha... View the full answer