Question: 1. Explain him about risk aversion, risk neutrality and risk seeking on the bases of standard deviation and coefficient of variation.
Talal can pick one of two investment portfolios - A and B. Each requires an initial outlay of $100,000 and each has a most likely annual
pessimistic, most likely, and optimistic outcomes are 30%, 50%, and 20%, respectively. Note that the sum of these probabilities must
equal 100%; that is, they must be based on all the alternatives considered.
Question:
1. Explain him about risk aversion, risk neutrality and risk seeking on the bases of standard deviation and coefficient of variation.
Details
Asset A
Asset B
1.
Initial Investment
$100.000
$100,000
Rate of Return - Pessimistic
16%
10%
Rate of Return - Most likely
18%
18%
Rate of Return - Optimistic
20%
26%
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