Question: a) Explain mean-variance dominance in simple terms. b) Rank the following two stocks on the basis of first-order stochastic dominance; second-order stochastic dominance; mean-variance

a) Explain mean-variance dominance in simple terms. b) Rank the following two stocks on the basis of first-order stochastic dominance; second-order stochastic dominance; mean-variance dominance. WIT Studio Payoff Probability MAPPA Probability $5 0.7 $10 0.3 $40 0.6 $95 0.3 $100 0.1 c) Assume an investor is a vN-M expected-utility maximizer. Assume further the investor is risk-averse and prefers having more money to less. Is it possible to say whether this investor will choose MAPPA or WIT Studio?

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