1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Nana76 [90]
3 years ago
11

An investor will choose between Asset Q with an expected return of 6.5% and a standard deviation of 5.5%, Asset U with an expect

ed return of 8.8% and a standard deviation of 5.5%, and Asset B with an expected return of 8.8% and a standard deviation of 6.5%. Which one should the investor prefer?A. Asset B B. Cannot be determined C. Asset Q D. Asset U
Business
1 answer:
Alexxx [7]3 years ago
7 0

Answer:

The investor will prefer asset U. So the correct answer is option D

Explanation:

To choose between these stocks, we will calculate the coefficient of variation (CV) which is used to assess the risk per unit of expected return. As most people are risk averse, we assume that the investor is risk averse. We will calculate the CV for all three investments and the stock having lowest CV will be selected.

<u>Coefficient of Variation (CV)</u>

Coefficient of Variation =  standard deviation / expected return

<u />

Asset Q = 5.5% / 6.5% = 0.846

Asset U = 5.5% / 8.8% = 0.625

Asset B = 6.5% / 8.8% = 0.738

Thus, asset U has the lowest CV and the investor =, being a risk averse, will prefer asset U.

You might be interested in
A marketing plan should be as detailed, and therefore as complicated as possible. True False
Natalija [7]

Answer:

False

Explanation:

It should be detailed, clear and straight to the point. It doesn't have to be anything complicated.

3 0
3 years ago
Read 2 more answers
People need to have _____ in the economy to spend money.
katen-ka-za [31]
People need to have [Purchasing Power] in the economy to be able so spend money. Purchasing power means having the financial ability to spend money in buying goods and services.

5 0
3 years ago
Read 2 more answers
Dont answer just for points please , ill give you a brailist if i like the answer​
solong [7]

Answer: 1. B 2.B

Explanation:

4 0
3 years ago
Ramos is an aggressive investor and likes to win at everything. He knows that it is impossible to win or beat the averages all o
Kamila [148]
The correct answer would be index mutual fund
3 0
3 years ago
please subscribe my mom's channel those who subscribed my mom's channel I will mark as brainlylist,thnx and follow 101 % gaurant
Jobisdone [24]

Answer:

Explanation:

don't worry bro i have subscribed just now

7 0
3 years ago
Other questions:
  • Sandhill Inc. has the following information related to an item in its ending inventory. Packit (Product # 874) has a cost of $76
    5·1 answer
  • the theme song from the movie jaws is an example of using sound for what purpose? dialogue heightening scene’s setting conveying
    5·2 answers
  • A chemist is studying the effect of acid rain on the steel in bridges. why would she most likely use rate laws in this study?
    5·1 answer
  • Why are savings tools ideal for storing emergency savings? identify at least two reasons. (2 points?
    10·1 answer
  • The return on shareholders' equity for... Income statement: 2018 Sales $ 2,500,000 Cost of goods sold 1,300,000 Net income 200,0
    6·1 answer
  • Mary Stahley invested $4500 in a 48-month certificate of deposit (CD) that earned 9.5% annual simple interest. When the CD matur
    9·1 answer
  • The annual planning process at Century Office Systems, Inc. had been arduous but produced a number of important marketing initia
    15·1 answer
  • If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes
    10·1 answer
  • Net credit sales $120,000 Average accounts receivable 20,000 Cash collections on credit sales 100,000 What is the receivables tu
    5·1 answer
  • what challenges might people living in a county or state with a high concentration of subprime scores be facing as a result of t
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!