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Below Are Two Examples of Tossing Two Coins Simultaneously, with the Following

Question 8

Multiple Choice

Below are two examples of tossing two coins simultaneously, with the following probability distribution of returns: EXAMPLE #1 (Two coins tossed simultaneously)
Head + head yields 40% gain
Head + tail yields 10% gain
Tail + head yields 10% gain
Tail + tail yields 20% loss
EXAMPLE #2 (Two coins tossed simultaneously)
Head + head yields 70% gain
Head + tail yields 10% gain
Tail + head yields 10% gain
Tail + tail yields 50% loss
From the two examples, which of the following statements is true?


A) example 1 has a higher expected return, but also has higher risk
B) example 2 has a higher expected return, but also has higher risk
C) example 2 has a lower expected return, but also has higher risk
D) the examples have the same expected returns and example 2 has higher risk

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