Question

Which of the following methods of selecting a strategy is consistent with risk averting behavior? Question 17 Not yet answered Marked out of 1.00 P Flag question Select one: a. Select the strategy with the larger coefficient of variation O b. All of the above are correct. O c. If two strategies have the same expected profit select the one with the smaller standard deviation Od. If two strategies have the same standard deviation, select the one with the smaller expected profit.

Answer 1

Answer is: (c) If two strategies have the same expected profit, select the one with smaller standard deviation

Explanation:

As the deviation is less, the certainty is more consistent

With option (a) with larger coefficient of variation, the decision will be less consistent and hence higher risk

With option (b) As a is incorrect, all are not correct

With option (d) With same Standard Deviation, the one with higher expected profit should be chosen.

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