You are considering investing in one of two projects, which have the following returns and probabilities of occurrence:

(a) Compute the mean return for each project.

(b) Compute the variance of return for each project

(c) Which project would you prefer, and why?

Transcribed Image Text:

Probability 0.10 0.20 0.25 0.30 0.10 0.05 Return on Investment Project B -35% -10% 15% 25% 40% 50% Project A -20% 0 10% 15% 20% 40% Probability 0.10 0.20 0.25 0.30 0.10 0.05 Return on Investment Project B -35% -10% 15% 25% 40% 50% Project A -20% 0 10% 15% 20% 40%

Answer rating: 100% (QA)

Given information a Mean return of the project A Mean return of the project can be obtained by using ... View the full answer