I have a microeconomics task in investment analysis. How do you pick the best share based on return of investment and standard deviations? The task is like this: 3 shares:
- Share A: 10% ROI & 20% std
- Share B: 15% ROI & 30% std
- Share C: 20% ROI & 40% std
Which share would a reasonable investor invest in? The correct answer is apparently B, but how do you calculate this? I know if a risk free rate was given, the investor invest in the share with the highest Sharpe Ratio, but in this task no risk free rate was given.
Any help would be appreciated.