Probability return standard deviation beta

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Reference no: EM13977811

Project 1 Probability Return Standard Deviation Beta 50% chance 22% 12% 1.1 50% chance - 4% Project 2 Probability Return Standard Deviation Beta 30% chance 36% 19.5% 0.8 40% chance 10.5% 30% chance - 20% Project 3 Probability Return Standard Deviation Beta 10% chance 28% 12% 2.0 70% chance 18% 20% chance - 8% Assume the risk-free rate of return is 2% and the market risk premium is 8%. If you are a risk averse investor, which project should you choose? Project 3 Project 2 Project 1 Either Project 2 or Project 3 because the higher expected return on project 3 offsets its higher risk.

Reference no: EM13977811

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