Rogue Recreation, Inc has normally distributed returns with an expecte

Rogue Recreation, Inc has normally distributed returns with an expected return of 15% and a
standard deviation of 5%, while Lake Tours, Inc has normally distributed returns with an expected
return of 15% and a standard deviation of 15%.

Which of the following is true?
A) Rogue Rec is likely to experience returns larger than those of Lake Tours.
B) Rational investors will prefer Lake Tours, Inc. over Rogue Recreation, Inc.
C) Lake Tours is more likely to have negative returns than Rogue Rec.
D) Lake Tours’ investors are not being adequately compensated for relevant risk.

ANSWER

C