Final answer:
The standard deviation of a portfolio's returns is found through data such as expected returns and variances of individual stocks and their correlations. The safest investment has the lowest standard deviation, and the riskiest has the highest. The investment with the highest expected return yields the most average profit considering the probabilities.
Step-by-step explanation:
The question asks about the standard deviation of the returns on a portfolio that includes investments in stocks A, B, and C. To determine this, we would typically need the individual expected returns, the standard deviations of each stock, and the correlation coefficients between the stocks. Without that information, we must consider other parts of the question to guide us. From the given information, one can construct a probability distribution function (PDF) for each investment by analyzing the potential returns and associated probabilities. Then, using the PDFs, we calculate the expected value and the variance or standard deviation for each investment.
The safest investment is usually defined as the one with the lowest standard deviation or variability of returns, while the riskiest investment would likely have the highest standard deviation. The investment with the highest expected return would be the one that yields the most profit on average, factoring in the probability of each outcome.