Using Excel’s statistical tools, calculate the standard
deviation of the distribution of each investment.
Which of the two investments is more risky?
Which investment should the individual choose?
Spreadsheet Problem 2: An individual is considering two
investment projects. Project A will return a zero profit if
conditions are poor, a profit of $4 if conditions are good,
and a profit of $8 if conditions are excellent. Project B will
return a profit of $2 if conditions are poor, a profit of $3 if
conditions are good, and a profit of $4 if conditions are
excellent. The probably distribution of the conditions is as
follows:
Conditions:
Poor
Good
Excellent
Probability
40%
50%
10%