Instruction 17-4
The following information is from two investment opportunities.
$$\begin{array} { l c c }
& A & B\
\text { Expectedmonetary } & \$ 900 & \$ 600 \
\text { value }\
\text { standarddeviation } & 100 & 50
\end{array}$$
-Referring to Instruction 17-4,which investment has the optimal return to risk ratio (RTRR)?
A) Investment A
B) Investment B
C) The investments are equal.
D) It cannot be determined.

Question

Instruction 17-4
The following information is from two investment opportunities.
 $$\begin{array} { l c c } 
& A & B\
\text { Expectedmonetary }   & \$ 900 & \$ 600 \
\text { value }\
\text { standarddeviation } & 100 & 50 
\end{array}$$
-Referring to Instruction 17-4,which investment has the optimal return to risk ratio (RTRR)?
A) Investment A
B) Investment B
C) The investments are equal.
D) It cannot be determined.

Quizplus · Accepted Answer

The return to risk ratio (RTRR) is calculated by dividing the expected monetary value by the standard deviation. For Investment A, RTRR = $900 / 100 = 9. For Investment B, RTRR = $600 / 50 = 12. Therefore, Investment B has the higher RTRR, indicating a better return for the level of risk.

Instruction 17-4 the Following Information Is from Two Investment Opportunities

Instruction 17-4
the Following Information Is from Two Investment Opportunities