Question: Tom rears is highly risk-averse while Sonny Outlook actually enjoys taking a risk.
A. Which one of our four investments should Tom choose? Compute coefficients of variation to help you in your choice
B. Which one of our four investments should Sonny choose?
|
Investments
|
Returns expected value
|
Standard deviation
|
|
Buy stocks
|
$7,000
|
$4,000
|
|
Buy bonds
|
5,000
|
1,560
|
|
Buy commodity futures
|
12,000
|
15,100
|
|
Buy options
|
8.000
|
8,850
|