Scenario 5.7:
As president and CEO of MegaWorld Industries, Natasha must decide on some very risky alternative investments. Consider the following:

-Refer to Scenario 5.7. Since Natasha is a risk-neutral executive, she would choose:
A) A.
B) B.
C) C.
D) D.
E) E.

Question

Scenario 5.7:
As president and CEO of MegaWorld Industries, Natasha must decide on some very risky alternative investments. Consider the following:
 
-Refer to Scenario 5.7. Since Natasha is a risk-neutral executive, she would choose:
A) A. 
B) B. 
C) C. 
D) D. 
E) E.

Quizplus · Accepted Answer

Since Natasha is risk-neutral, she would choose the investment with the highest expected return. Option B has the highest expected return of $60 million, which is higher than the expected return of options A, C, D, and E. Therefore, option B would be the best choice for Natasha.

Scenario 5.7: As President and CEO of MegaWorld Industries, Natasha Must Decide