An individual has to choose between investment A and investment B. The individual estimates that the income and probability of the income from each investment are as given in the following table:
| Investment A |
Investment B |
| Income |
Probability |
Income |
Probability |
| $4,000 |
0.2 |
$4,000 |
0.3 |
| $5,000 |
0.3 |
$6,000 |
0.4 |
| $6,000 |
0.3 |
$8,000 |
0.3 |
| $7,000 |
0.2 |
|
|
(a) Using Excelâ€TMs statistical tools, calculate the standard deviation of the distribution of each investment.
(b) Which of the two investments is more risky?
(c) Which investment should the individual choose?