John invested $1,000 in a risky investment and Bill invested $1,000 in a less risky investment.One year later,Bill's investment is worth $1,030.Which of the following statements is MOST correct?
A) If John's investment is worth less than $1,030, then John was irrational to invest in the risky project.
B) John's investment must be worth more than $1,030 because of the risk-return trade-off, given that John's investment was more risky.
C) If John's investment is worth more than $1,030, then Bill was irrational to invest in the less risky investment.
D) The worth of John's investment cannot be determined with the information given.

Question

Quizplus · Accepted Answer

The worth of John's investment cannot be determined with the information given. We do not know the rate of return on John's investment or if he experienced any gains or losses. It is also possible that John's investment was worth less than $1,030. Thus, we cannot make any conclusions about the rationality of either investor based on the information provided.

John Invested $1,000 in a Risky Investment and Bill Invested