The answer to the question is highlighted in red. Explanations are highlighted in green.
7. Based on the information given below, which of the investments would be considered best based on its risk and return relationship? Assume all investors are risk-averse and the investments will be held in isolation, not in a portfolio.
Investment
D E F
Expected
return, 
10.0% 18.0% 18.0%
Standard deviation, σ 7.0% 12.0% 20.0%
Coefficient of variation, CV 0.70 0.67 1.11
a. D, because its total risk is lowest.
b. E. because its
coefficient of variation is lowest.
c. F, because its standard deviation, σ, is highest.
d. E and F, because the have the same
expected return, .
e. None of the above.