Given a choice between two investments with the same expected payoff: Answer 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
Given a choice between two investments with the same expected payoff: Answer 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
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 7MC
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Question
Given a choice between two investments with the same expected payoff:
Answer
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
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