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What is the standard deviation for investment y

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Reference no: EM133085194

Question - Consider the following investment alternatives.

Investment X

Investment Y

Outcome

NPV

Probability

Outcome

NPV

Probability

1

5

0.75

A

0

0.75

2

10

0.25

B

15

0.25

A) What are the expected Net Present Values (NPV) for investment X and investment Y.

B) What is the Standard Deviation for investment Y.

C) Suppose an investor has the following Utility Function. U = P^2, where U is utility and P is net present value, P^2 is P*P. Which investment would he/she choose? Show your work and explain your answer. Be sure to discuss the preference toward risk.

Reference no: EM133085194

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