Which of the following methods of selecting a strategy is consistent with risk-averting behavior?
A) If two strategies have the same expected profit, select the one with the smaller standard deviation.
B) If two strategies have the same standard deviation, select the one with the smaller expected profit.
C) Select the strategy with the larger coefficient of variation.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

A risk-averting individual prefers to choose an option with less uncertainty if the expected outcomes are the same. Therefore, among strategies with the same expected profit, choosing the one with a smaller standard deviation indicates a preference for less risk, consistent with risk-averting behavior.

Which of the Following Methods of Selecting a Strategy Is