Assets A and B each have an expected return of 10 percent. Asset A has a standard deviation of 12 percent while Asset B has a standard deviation of 13 percent. Which asset would a rational investor choose

Respuesta :

A rational investor would choose A. This is because it is less volatile and has a lower standard deviation. ln this case the return on both assets is the same and hence the deciding factor is the standard deviation. Lower deviation means lesser risk and lesser chances of fluctuations.

A hypothetical person who weighs the advantages and disadvantages of every choice before acting; the foundation for many economic theories and models.

Investor disillusionment occurs when the very people who support the corporate system lose confidence in it. According to the corporate form of business, investors provide a corporation with capital by purchasing its shares.

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