Two projects have the following NPVs and standard deviations: $$\begin{array} { | r | c | c | }
\hline & \text { Project } A & \text { Project } B \
\hline \text { NPV } & 200 & 200 \
\hline \text { Standard deviation } & 75 & 100 \
\hline
\end{array}$$ A person who selects project A over project B is
A)risk seeking.
B)risk indifferent.
C)risk averse.
D)None of the above

Question

Two projects have the following NPVs and standard deviations: $$\begin{array} { | r | c | c | } 
\hline & \text { Project } A & \text { Project } B \
\hline \text { NPV } & 200 & 200 \
\hline \text { Standard deviation } & 75 & 100 \
\hline
\end{array}$$ A person who selects project A over project B is
A)risk seeking.
B)risk indifferent.
C)risk averse.
D)None of the above

Quizplus · Accepted Answer

Project A has a lower standard deviation than Project B, indicating it has less risk for the same NPV. Choosing Project A, therefore, demonstrates risk aversion.

Two Projects Have the Following NPVs and Standard Deviations A Person Who Selects Project a Over Project B Is