Given the following investment returns from two stocks: Stock A: 5%,6%,7%,9% 23% (mean = 10% and…

Given the following investment returns from two stocks: Stock A: 5%,6%,7%,9% 23% (mean = 10% and standard deviation = 7.416%) Stock B: 50%,60% 70%,90% 230% (mean = 100% and standard deviation = 74.16%). Which stock has the greatest absolute risk? Which stock should a risk averse investor choose?

Two correct answers, all or nothing.

1. Stock A has the greatest absolute risk

2. Stock B has the greatest absolute risk.

3. Both stocks have the same amount of absolute risk

4. A risk averse investor should invest in Stock A.

5. A risk averse investor should invest in Stock B.

6. A risk averse investor should invest in either of the two stocks since they are equally attractive.