Suppose you visit with a financial adviser, and you are considering investing some of your wealth in one of three investment portfolios: stocks, bonds, or commodities. Your financial adviser provides you with the following table, which gives the probabilities of possible returns from each investment:

a. Which investment should you choose to maximize your expected return: stocks, bonds, or commodities?
b. If you are risk-averse and have to choose between the stock and the bond investments, which should you choose? Why?

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Bonds Commodities Stocks Return Return Return Probability 0.25 Probability Probability 0.2 20% 0.6 0.4 12% 10% 0.25 0.25 10% 7.50% 12% 0.25 0.25 6% 8% 4% 0.25 0.25 6% 0.05 0%