You are currently facing four investment alternatives, the risk-return characteristics of which are given below: Alternatives A B C D Expected Return (%) 16 18 12 20 Standard Deviation 20 22 18 25 Which alternative would you choose for investment? Why?
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As an investor, you may want some assurance that your money will grow and net you a profit. While it may be difficult to predict exactly how much you may earn, there are a few ways that you can try to determine your return. An expected return and a standard deviation are two statistical measures that investors can use to analyze their portfolios. The expected return is the anticipated amount of returns that a portfolio may generate, whereas the standard deviation of a portfolio measures the amount that the returns deviate from its mean.
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