Homework Answers
Option ( B ).
Alanood would choose Stock Alpha as it is less risky than Exchange Traded Fund ( EFT). One of the most common methods of determining risk in investment is Standard Deviation. It helps to determine market volatility. If the standard deviation is high, it means the investment is risky. If the standard deviation is low, it means the prices are calm and the investment is less risky.
Since Alanood is looking for a safe investment that provides safe investment with less risk, she would choose the one with low standard deviation than the high standard deviation.
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