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 tradeoff, 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 have no information about the performance of John's investment, and the fact that Bill's investment earned more does not necessarily mean John's investment was irrational or that Bill's investment was irrational. We cannot draw any conclusions about John's investment based on this information alone.

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