Given the following expected returns and standard deviations of assets B, M, Q, and D, which asset should the prudent financial manager select?
A) Asset B
B) Asset M
C) Asset Q
D) Asset D

Question

Given the following expected returns and standard deviations of assets B, M, Q, and D, which asset should the prudent financial manager select? 
A) Asset B 
B) Asset M 
C) Asset Q 
D) Asset D

Quizplus · Accepted Answer

The prudent financial manager should select the asset with the highest expected return and the lowest standard deviation. Looking at the data provided, Asset B has the highest expected return of 10% and a relatively low standard deviation of 7%. Therefore, Asset B is the best choice.

Given the Following Expected Returns and Standard Deviations of Assets