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As a chief investment officer (CIO) working for the major European hospitality investment company, you are given

the following financial information about three potential hotel investments. From a risk-tolerant investor point of view, if you could only choose one based on the relative risk structure of these three different hotel investments, which one of these investments would you choose? Why?


Expected Rate of Return (r^)

Standard Deviation (σ)

Hotel X



Hotel Y



Hotel Z



A. Risk-tolerant investor would choose hotel Y because of the the highest relative risk aganist the other investment options and thus, higher the return

B. Risk-tolerant investor would choose the investment option Z since it has the mid-risk level when compared to the other investment options

C. All of the investment options are favorable to the risk-tolerant investor

D. Risk-tolerant investor would choose hotel X since it has the least relative risk when compared to the other hotels

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