Two venture capitalists, John and Myra, are reviewing 5 proposals. They cannot agree on the rate of return of one specific project (labeled C). So, they come up with the following probability model that descnbes the probability of return on project C.

They agreed that they use the expected rate of return and standard deviation from this probability model to complete the following table.

Finally, John decides to invest 3 million dollars, equally spread, in project A, B, and D, Myra decides to invest in project A,V, and E, each 1 million dollars. Whose portfolio has higher expected rate of return?

Whose portfolio is riskier?

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Return P(R=r) 0.0% -5.0% 5.0% 8.0% 12.5% 0.15 0.1 0.35 0.3 0.1 4802 rate of return 8% 12% 15% standard deviation 7% 8% 8% ADM2303X E Assignment 2 part 2 3% 1% Spring 2019 Return P(R=r) 0.0% -5.0% 5.0% 8.0% 12.5% 0.15 0.1 0.35 0.3 0.1 4802 rate of return 8% 12% 15% standard deviation 7% 8% 8% ADM2303X E Assignment 2 part 2 3% 1% Spring 2019

Answer rating: 100% (QA)

First we need to find the expectation and standard deviation of project C Let be the rate of return ... View the full answer