Consider the following equally likely project outcomes:

Consider the following equally likely project outcomes: Profit XY Pessimistic prediction$0$500 Expected outcome$ 500$500 Optimistic prediction$1000 $500
a. Project Y has less uncertainty than Project X.
b. Project X has more variability than Project Y.
c. a and b.
d. Since Projects X and Y have the same expected outcomes of $500, investors will view them as identical in value.

 

Solution