You are evaluating two investments,A and B.Data appear below: AB Expected return 10% 12% Highest possible return 20% 14% Lowest possible return 0% - 4% The riskier investment is
A)A,because it has a lower expected return.
B)A,because it has a wider range of returns.
C)B,because it has a possible loss.
D)B,because its possible highest return is less than A.

Question

Quizplus · Accepted Answer

Investment B is riskier because it has a wider range of potential returns, with a possible loss of -4%, compared to Investment A's lowest possible return of 0%. Even though Investment B has a higher expected return, the possibility of losing money makes it the riskier choice.

You Are Evaluating Two Investments,A and B