Final answer:
The scenario where all investors have the same estimates for investment performance is unrealistic because in the real world, investors have various expectations. The safest and riskiest investments are determined by their variances, while the one with the highest expected return has the greatest expected value.
Step-by-step explanation:
The question posits a scenario in which all investors have the same expectations regarding expected returns, variances, and covariances of their investments. Such a world is best described as unrealistic, because in reality, investors have different information, beliefs, and methods of analysis, leading to a variety of expectations about future performance of investments.
To answer the rest of the questions which seem to be part of a different context:
- Expected value for each investment can be found by calculating the weighted average of all possible returns, where each return is weighted by its probability of occurrence.
- The safest investment is typically the one with the smallest variance or standard deviation, indicating that its returns are more predictable and less volatile.
- Conversely, the riskiest investment is likely to be the one with the highest variance or standard deviation, suggesting a higher level of unpredictability and potential for wide fluctuations in returns.
- The investment with the highest expected return is identified by comparing the expected values of the different investments, where the highest value indicates the greatest expected return.