Investment A has an expected return of 8% with a standard deviation of 12%. Investment B has an expected return of of 10% with a standard deviation 15%.
◦ Investment A should be preferred because of its lower risk.
◦ Investment B should be preferred because of its higher rate of return.
◦ Preference for A or B would depend on the investor's risk tolerance.
◦ Neither investment is acceptable because their standard deviations are greater than their expected rates of return.