According to the mean-variance criterion,which one of the following investments dominates all others?
A) E(r)= 0.15;Variance = 0.20
B) E(r)= 0.10;Variance = 0.20
C) E(r)= 0.10;Variance = 0.25
D) E(r)= 0.15;Variance = 0.25
E) none of these is dominates the other alternatives.

Question

Quizplus · Accepted Answer

According to the mean-variance criterion, an investment that has the highest expected return for a given level of risk (measured by variance) is preferred. In this case, investment A has the highest expected return (0.15) and the same variance (0.20) as investment B. Therefore, investment A dominates all other investments.

According to the Mean-Variance Criterion,which One of the Following Investments