A rational investor will always prefer an investment with a lower standard deviation of returns,because such investments are less risky.

Question

Quizplus · Accepted Answer

While a lower standard deviation of returns indicates less volatility and potentially less risk, a rational investor will also consider other factors such as the expected return, correlation with other investments in their portfolio, and their own risk tolerance. An investment with a slightly higher standard deviation might be preferred if it offers significantly higher expected returns or diversification benefits.

A Rational Investor Will Always Prefer an Investment with a Lower