Given that there are two financial securities Security A and Security B Security A is a risk free investment with a $1,200 return Security B pays $24,000 20 of the time and encounters $4,500 loss the rest of the time Find the expected returns of Security A and Security B individually Show all your calculations Calculate the standard deviations of Security A and Security B individually Show all your calculations Which investment, Security A and Security B, will a risk averse investor prefer Explain your answer Which investment, Security A and Security B, will a risk neutral investor prefer Explain your answer

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Question: Given that there are two financial securities: Security A and Security B. Security A is a risk-free investment with a $1,200 return. Security B pays

Given that there are two financial securities: Security A and Security B. Security A is a risk-free investment with a $1,200 return. Security B pays $24,000 20% of the time and encounters $4,500 loss the rest of the time.

Find the expected returns of Security A and Security B individually.

Show all your calculations.
Calculate the standard deviations of Security A and Security B individually.

Show all your calculations.
Which investment, Security A and Security B, will a risk-averse investor

prefer? Explain your answer.
Which investment, Security A and Security B, will a risk-neutral investor

prefer? Explain your answer.

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