Question: Consider two assets, A and B in three equally likely scenarios. In scenario 1, they earn 4% and 10%, respectively. In scenario 2, they both

Consider two assets, A and B in three equally likely scenarios. In scenario 1, they earn 4% and 10%, respectively. In scenario 2, they both earn 5%. In scenario 3, they earn 6% and 0%, respectively. Find the expected rates of return for assets A and B. S1 S2 S3 Asset A 4% 5% 6% Asset B 10% 5% 0% Which asset would a risk-averse investor, who cares only about expected return and risk and can choose only one or the other, prefer?

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