Gemma and Emily expect investments A and B to yield an annual return of 15 percent and 10 percent respectively.While Gemma invests in A, Emily invests in B.This implies that Gemma has a higher risk tolerance than Emily.

Question

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Gemma's decision to invest in option A, which has a higher annual return (15%) than option B (10%), implies that she is willing to take on a higher level of risk in pursuit of potentially higher returns. Therefore, Gemma has a higher risk tolerance than Emily.

Gemma and Emily Expect Investments a and B to Yield