Investment A has an expected return of 15% per year, while Investment

Investment A has an expected return of 15% per year, while Investment B has an expected return of
12% per year. A rational investor will choose

A) Investment A if A and B are of equal risk.
B) Investment A because of the higher expected return.
C) Investment B because a lower return means lower risk.
D) Investment A only if the standard deviation of returns for A is higher than the standard
deviation of returns for B.

ANSWER

A