Which of the following projects would you invest in? Project X has an expected r

Question

Which of the following projects would you invest in? Project X has an expected return of 14% and a standard deviation of 10%. Project Y has an expected return of 13% and a standard deviation of 11%.

Project X because it has a higher return and more risk

Project Y because it has a lower return and less risk

Project X because it has a higher return and less risk

There is not enough information to make this decision

Project X because it has a higher return and more risk

Project Y because it has a lower return and less risk

Project X because it has a higher return and less risk

There is not enough information to make this decision

Explanation / Answer

Answer is Third option – Project X because it has higher return and less risk

Project X

Project Y

Better Option

Reason

Return

14%

13%

Project X

High return

Standard Deviation (Risk)

10%

11%

Project X

Less Risk

Project X

Project Y

Better Option

Reason

Return

14%

13%

Project X

High return

Standard Deviation (Risk)

10%

11%

Project X

Less Risk

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