Given a choice between two investments with the same expected payoff:
A)Most people will choose the one with the lower standard deviation
B)Most people will opt for the one with the higher standard deviation
C)Most people will be indifferent since the expected payoffs are the same
D)Most people will calculate the variance to assess the relative risks of the two choices

Question

Quizplus · Accepted Answer

Most people will choose the investment with the lower standard deviation because it indicates less risk or variability in returns. People generally prefer less risk and volatility in their investments, even if the expected payoffs are the same.

Given a Choice Between Two Investments with the Same Expected