The graph to the right shows the distribution of outcomes for two investment opportunities; Opportunity A in red and Opportunity B in blue. Which opportunity has the lowest risk? Which has the highest expected payoff? OA. B has the lowest risk, but A has the highest expected payoff OB. A has the lowest risk and highest expected payoff OC. A has the lowest risk, but B has the highest expected payoff D. B has the lowest risk, and both have the same expected payoff. OE B has the lowest risk and highest expected payoff OF. A has the lowest risk, and both have the same expected payoff.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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The graph to the right shows the distribution of outcomes for two investment opportunities;
Opportunity A in red and Opportunity B in blue.
Which opportunity has the lowest risk? Which has the highest expected payoff?
OA. B has the lowest risk, but A has the highest expected payoff.
OB. A has the lowest risk and highest expected payoff.
OC. A has the lowest risk, but B has the highest expected payoff.
D. B has the lowest risk, and both have the same expected payoff.
OE. B has the lowest risk and highest expected payoff.
OF. A has the lowest risk, and both have the same expected payoff.
Probability
500
1000
Payoff (5)
Opportunity B
Opportunity A
1500
2000
Transcribed Image Text:The graph to the right shows the distribution of outcomes for two investment opportunities; Opportunity A in red and Opportunity B in blue. Which opportunity has the lowest risk? Which has the highest expected payoff? OA. B has the lowest risk, but A has the highest expected payoff. OB. A has the lowest risk and highest expected payoff. OC. A has the lowest risk, but B has the highest expected payoff. D. B has the lowest risk, and both have the same expected payoff. OE. B has the lowest risk and highest expected payoff. OF. A has the lowest risk, and both have the same expected payoff. Probability 500 1000 Payoff (5) Opportunity B Opportunity A 1500 2000
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