Table 5.4

-Refer to Table 5.4. If outcomes 1 and 2 are equally likely at Job A, and if at Job B the $20 outcome occurs with probability .1, and the $50 outcome occurs with probability .9, then:
A) Job A is safer because the difference in the probabilities is lower.
B) Job A is riskier only because the expected value is lower.
C) Job A is riskier because the standard deviation is higher.
D) Job B is riskier because the difference in the probabilities is higher.
E) There is no definite way given this information to tell how risky the two jobs are.

Question

Table 5.4
 
-Refer to Table 5.4. If outcomes 1 and 2 are equally likely at Job A, and if at Job B the $20 outcome occurs with probability .1, and the $50 outcome occurs with probability .9, then:
A) Job A is safer because the difference in the probabilities is lower. 
B) Job A is riskier only because the expected value is lower. 
C) Job A is riskier because the standard deviation is higher. 
D) Job B is riskier because the difference in the probabilities is higher. 
E) There is no definite way given this information to tell how risky the two jobs are.

Quizplus · Accepted Answer

Job A is considered riskier because the standard deviation, which measures the spread or variability of outcomes, is higher when outcomes are equally likely compared to Job B, where one outcome is much more likely than the other.

Table 5.4 -Refer to Table 5.4. If Outcomes 1 and 2 Are