Investments B and C both have the same standard deviation of 20%. If the expected return on B is 15% and that of C is 18%, then the investors would
A) Prefer B to C
B) Prefer C to B
C) Reject both B and C
D) None of the above

Question

Quizplus · Accepted Answer

The investors would prefer the investment option that provides higher returns for the same level of risk. Since both investments have the same standard deviation, we can compare them based on their expected returns. Investment C has an expected return of 18%, which is higher than the expected return of 15% for investment B. Therefore, the investors would prefer investment C over investment B.

Investments B and C Both Have the Same Standard Deviation