Find expected return and standard deviation each investment

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Reference no: EM13902492

Suppose that two investments have the same three payoffs, but the probability associated with each payoff differs, as illustrated in the table below:

PAYOFF	PROBABILITY (INVESTMENT A)	PROBABILITY (INVESTMENTB)
$300	0.10	0.30
$250	0.80	0.40
$200	0.10	0.30

a. Find the expected return and standard deviation of each investment.

b. Jill has the utility function U = 5I, where I denotes the payoff. Which investment will she choose?

c. Ken has the utility function U = 51I. Which investment will he choose?

d. Laura has the utility function U = 5I2. Which invest- ment will she choose?

Reference no: EM13902492

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