Final answer:
The student's question involves the evaluation of investment risk and the calculation of the expected rate of return for different investment opportunities, considering the probability of various outcomes.
Step-by-step explanation:
The question pertains to the concepts of expected rate of return, risk, and actual rate of return in investments, particularly in the context of portfolio management. When calculating the expected value of an investment, you would weigh the possible outcomes by their probabilities of occurrence. The risk involved in an investment refers to the level of uncertainty regarding the returns it may yield. Higher risk investments generally offer higher potential returns to compensate for the increased uncertainty. The actual rate of return indicates the actual gains made on an investment over a certain period.
To consider which investment is the safest or the riskiest, one may examine the likelihood of various outcomes. A safe investment would typically offer more predictable returns with lower variability, while a risky investment would have a wide range of potential returns. To find which investment has the highest expected return, you would calculate the average expected return for each investment based on their respective probabilities and outcomes.