congan.eady has in pac. which have an ?xpected netum of 15% andastandarddeaton o
ID: 2618202 • Letter: C
Question
congan.eady has in pac. which have an ?xpected netum of 15% andastandarddeaton of 5% The expededreturns and standa ddev ations afths memerts areas toos m Sharon were ruk metral, which investment might the select? Data Table d. Gven the aoonalisk preference behixhibed by fnancial managers, which investment might be preferred? Sharan were rk nestral, which investment might the select? (Select the best answer below) (da onheioon located on he too-nght corner ofme copy its contents into a spreadset) a tatie b. n onder to ?A, investment Y 0?. Expected investment X C. investment Z D None of the ree investments Iif she were ris avse which investment might she select?(Seledt the best answer belo 8% OA. investment x Print DoneExplanation / Answer
Ans: a) Rik Neutral investors wish to get higher returns without thinking about the increase in risk level. Here in this case the return for investment Z is max. Hence, Option c is correct.
b) Risk averse investor is actually looking for the investment , where the risk is nominal . If we will do the compare for all the 3 investments the risk is greater than the investments company has already in place, but investment Z is having low risk and higher return . option c is correct.
c) Risk seeking investor will seek for more risk prone investments. So, option A is correct here i.e Investment Y as having maximum risk
d) Traditionally thefinancial managers are risk-averse and hence they will choose investment Z as preffered investment.
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