Detailed Answer
Answer (B) is correct. The company decided to go with the guaranteed 4% return instead of taking the investment with an 8% return. This shows that they have a low risk tolerance, since they were not willing to take the additional risk associated with the 8% investment. The certainty equivalent specifies at what point the firm is indifferent to the choice between a certain sum of money and the expected value of a risky sum. Since the firm would rather take the sum of money than the expected value of the risky sum, the certainty equivalent is less than expected value.