Your company consists of two different projects. You expect things to be either good next year with probability 1 2 or bad with the same probability 1 2 . If things will be good, the first project will pay $5M and the second project will pay $20M one year from now. If things will be bad, the first project will pay $15M and the second project will pay $10M one year from now.

(a) (2.5 points) Which project is riskier?

(b) (2.5 points) What is the total risk of your company?

Answer rating: 100% (QA)

a To determine which project is riskier we can compare the variability or standard deviation of the ... View the full answer