Comparing Investments. Suppose that the random variables X and Y represent the amount of return on two
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Comparing Investments. Suppose that the random variables X and Y represent the amount of return on two different investments. Further suppose that the mean of X equals the mean of Y but that the standard deviation of X is greater than the standard deviation of Y .
a. On average, is there a difference between the returns of the two investments? Explain your answer.
b. Which investment is more conservative? Why?
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