If two investments have the same expected return, a rational investor will choose the the investment with the greater risk in an effort to get a much larger return.

Question

Quizplus · Accepted Answer

A rational investor would actually choose the investment with lower risk because it offers the same expected return with less variability in potential outcomes. In other words, the investor is not willing to take on greater risk for the same return.

If Two Investments Have the Same Expected Return, a Rational