
52 oil mogul
A better reason to choose 1 over 2 is that even though the expected values are same, one generally wants to minimize risk (defined as standard deviation/variance for financey types). So,
a 1% chance of making 50 cents is better than a 1% chance of losing 50 combined with a one percent chance of making a dollar  there is no riskreward tradeoff to select 1 over 2. (Of course, someone could be risk loving...but that's not relevant to classical finance/portfolio theory...though you can certainly point that out after stating the prior rationale, assuming your interviewers actually care abut such matters).
andrew lin
Sunday, February 02, 2003
Recent Topics
Fog Creek Home
