Share A has an expected return of 12% and risk level of 10%. Share B has an expected return of 12% and risk level of 14%. Share C has an expected return of 10% and risk level of 14%. Rank them in order of your preference.
A) A, B, C.
B) B, C, A.
C) C, B, A.
D) B, A, C.

Question

Quizplus · Accepted Answer

Preference is typically given to shares with higher returns for a given level of risk or lower risk for a given level of return. Share A offers the same return as Share B but at a lower risk, making it more attractive. Share C offers a lower return at the same risk as Share B, making it the least attractive. Therefore, the order of preference is A, B, C.

Share a Has an Expected Return of 12% and Risk