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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? A. B has the lowest risk and highest expected payoff. B. B has the lowest risk, but A has the highest expected payoff. C. A has the lowest risk and highest expected payoff. D. B has the lowest risk, and both have the same expected payoff. ○ E. A has the lowest risk, and both have the same expected payoff. OF. A has the lowest risk, but B has the highest expected payoff. Probability Opportunity B Opportunity A 500 1000 1500 2000 Payoff ($)

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? A. B has the lowest risk and highest expected payoff. B. B has the lowest risk, but A has the highest expected payoff. C. A has the lowest risk and highest expected payoff. D. B has the lowest risk, and both have the same expected payoff. ○ E. A has the lowest risk, and both have the same expected payoff. OF. A has the lowest risk, but B has the highest expected payoff. Probability Opportunity B Opportunity A 500 1000 1500 2000 Payoff ($)

Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter29: Interest, Rent, And Profit
Section29.4: The Entrepreneur
Problem 1ST
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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? A. B has the lowest risk and highest expected payoff. B. B has the lowest risk, but A has the highest expected payoff. C. A has the lowest risk and highest expected payoff. D. B has the lowest risk, and both have the same expected payoff. ○ E. A has the lowest risk, and both have the same expected payoff. OF. A has the lowest risk, but B has the highest expected payoff. Probability Opportunity B Opportunity A 500 1000 1500 2000 Payoff ($)
Transcribed Image Text:The graph to the right shows the distribution of outcomes for two investment opportunities; Opportunity A in red and Opportunity B in blue. Which opportunity has the lowest risk? Which has the highest expected payoff? A. B has the lowest risk and highest expected payoff. B. B has the lowest risk, but A has the highest expected payoff. C. A has the lowest risk and highest expected payoff. D. B has the lowest risk, and both have the same expected payoff. ○ E. A has the lowest risk, and both have the same expected payoff. OF. A has the lowest risk, but B has the highest expected payoff. Probability Opportunity B Opportunity A 500 1000 1500 2000 Payoff ($)
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