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Consider these two investment strategies: Strategy 1(%)   Strategy 2(%) Expected return   5   10 Standard deviation   0  ...

Consider these two investment strategies: Strategy 1(%)   Strategy 2(%) Expected return   5   10 Standard deviation   0   3 Highest return   6   12 Lowest return   5   6 Strategy __________ is the dominant strategy because __________. A. 1; it has the highest reward/risk ratio B. 2; its return is greater than or equal to the return of Strategy C. 2; it has the highest reward/risk ratio D. 1; it is riskless E. Both strategies are equally preferred.

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Answer #1

Strategy 2 has lowest return of 6%, strategy 1 has the highest return of 6%.

Hence, return on strategy 2 is always ≥ return on strategy 1.

Hence, strategy 2 is the dominant strategy.

Hence, the correct answer is option B. 2; its return is greater than or equal to the return of Strategy 1

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