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Reward Risk Ratio for Project A and Project B

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Your company is considering two mutually exclusive projects A and B. The expected return and standard deviation of project is A 20% and 15%, respectively. The expected return and standard deviation of project B is 25% and 20%, respectively. The risk-free rate is 8%.

a) What is the reward to risk ratio for project A?

b) What is the reward to risk ratio for project B?

c) Which project do you prefer and why?

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Response discusses the Reward Risk Ratio for Project A and Project B

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Your company is considering two mutually exclusive projects A and B. The expected return and standard deviation of project is A 20% and 15%, respectively. The expected return and standard deviation of project B is 25% and 20%, respectively. The risk-free rate is 8%.

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