Question

	a	b	c
expected return	15%	30%	80%
variance	5%	7%	12%

If there are three investments A, B and C: A B C Expected return 15% 30% 80% Variance 5% 7% 12% If you can only choose one investment, which one is your choice and why? You can answer this question based on your own risk preference. And there is no need to do calculations for this question.

Answer 1

I am 24 years old and currently employed. I consider myself as a risk seeker, who don't mind taking risks if substantial awards are available. I have limited need of funds right now and can hold on to risky investment for a longer time

Accordingly i will prefer investing in C Security which provides a substantial return of 80% with higher risk of 12% variance.

Comparing to Sec B, with just 5% additional variance, returns expected increases by 50% hence Sec C will be selected by me.