Define risk premium, Why does the Variance calculation,

Define risk premium

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Reference no: EM131915098

1. Why does the Variance calculation, leading to Standard Deviation, square all Return differences from the mean, positive or negative?

2. Define Risk Premium.

3. Consider two mutually exclusive investment projects, each with MARR = 14.7%, as given below. On the basis of the NPW criterion, which alternative should be selected? Enter the NPW of the preferred option.

Project A: ($)

-22,700

15,660

14,950

16,700

Project B: ($)

-16,600

12,840

15,830

14,490

Reference no: EM131915098

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