Friday, 22 May 2015

Tim Trepid is highly risk-averse while Mike Macho actually enjoys taking a risk.

Tim Trepid is highly risk-averse while Mike Macho actually enjoys taking a risk.

 
InvestmentsReturns:
Expected Value
Standard
Deviation
  Buy stocks$9,470 $6,120 
  Buy bonds 7,560  2,850 
  Buy commodity futures 20,400  26,100 
  Buy options 18,800  16,600 


 
a-1.
Compute the coefficients of variation. (Round your answers to 3 decimal places.)

 
 Coefficient of
Variation
  Buy stocks       
  Buy bonds  
  Buy commodity futures  
  Buy options  


 
a-2.Which one of the following four investments should Tim choose?
  

 
Buy bonds
 
 
b.  Which one of the four investments should Mike choose?
  
 Buy commodity futures

 
Explanation: