John invested $1,000 in a risky investment and Bill invested $1,000 in

John invested $1,000 in a risky investment and Bill invested $1,000 in a less risky investment. One
year later, Bill’s investment is worth $1,030. Which of the following statements is MOST correct?

A) John’s investment must be worth more than $1,030 because of the risk-return trade-off, given
that John’s investment was more risky.
B) If John’s investment is worth less than $1,030, then John was irrational to invest in the risky
project.
C) If John’s investment is worth more than $1,030, then Bill was irrational to invest in the less
risky investment.
D) The worth of John’s investment cannot be determined with the information given.

ANSWER

D