Based on the information given below, which of the investments would be considered best based on its risk and return relationship? Assume all investors are risk-averse and the investments will be held in isolation, not in a portfolio. Investment
D E F Expected return, 10.0% 18.0% 18.0% Standard deviation, ? 7.0% 12.0% 20.0%
A) D, because its total risk is lowest.
B) E, because its coefficient of variation is lowest.
C) F, because its standard deviation, ?, is highest.
D) E and F, because the have the same expected return, .
E) None of the above.
Correct Answer:
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