Which of the following statements is (are) true for a risk averse investor? Group of answer...
Which of the following statements is (are) true for a risk averse investor? Group of answer choices Neither of the above statements are true. If two investment alternatives have equal returns, choose the one with lower risk. If two investment alternatives have equal risk, choose the one with lower return. Both of the above statements are true.
Homework Answers
The correct answer is If two investment alternatives have equal returns, choose the one with lower risk.
A risk-averse investor is one who takes less risk to attain a certain level of return or seeks a greater return for a given level of risk.
Can you please upvote? Thank You :-)
Add Answer to:
Which of the following statements is (are) true for a risk
averse investor? Group of answer...
4. Risk aversion Erik is an investor with $5,000 available for investment. He has the following...
4. Risk aversion Erik is an investor with $5,000 available for investment. He has the following three investment possibilities from which to choose: Option Scenarios Keep the $5,000 in cash for one year. Invest in a friend's business with a 50% chance of getting $10,000 after one year and a 50% chance of getting nothing. Invest in a relative's business with a 30% chance of getting $15,000 after one year, 20% chance of getting $2,500 after one year, 50% chance...
5. Risk aversion Erik is an investor with $5,000 available for investment. He has the folllowing three investment possi...
5. Risk aversion Erik is an investor with $5,000 available for investment. He has the folllowing three investment possibilities from which to choose: Option Scenarios Keep the $5,000 in cash for one year 1 2 Invest in a friend's business with a 50% chance of getting $10,000 after one year and a 50% chance of getting nothing Invest in a relative's business with a 3 30% chance of getting $15,000 after one year, 20% chance of getting $2,500 after one...
When we say that rational investors are risk-averse, it means the investor does not like risk...
When we say that rational investors are risk-averse, it means the investor does not like risk and would consider a higher risk project only if the expected return from that project is sufficient to compensate for the higher risk. True False When investors require higher rates of return for investments that have higher variability of returns, this is evidence of risk aversion. True False
Which of the following statements is (are) TRUE? I) Risk-aversion investors accept investments that are fair...
Which of the following statements is (are) TRUE? I) Risk-aversion investors accept investments that are fair games II) Risk-neutral investors judge investments only by expected returns – risk is not relevant III) Risk-averse and risk loving investors consider both an investment’s risk and return IV) Highly risk-averse investors would still allocate a small portion of their savings to stocks Choose from the options below: a) II only b) I only c) II,III and IV only d) I and II only...
You are a risk-averse investor who is considering investing in one of two economies. In the...
You are a risk-averse investor who is considering investing in one of two economies. In the first economy, all stocks move together - in good times all prices rise together and in bad times they all fall together. In the second economy, stock returns are independent - one stock increasing in price has no effect on the prices of other stocks. Which economy would you choose to invest in? Explain.
Which of the following statements is CORRECT? Group of answer choices -The CAPM has been thoroughly...
Which of the following statements is CORRECT? Group of answer choices -The CAPM has been thoroughly tested, and the theory has been confirmed beyond any reasonable doubt. -A graph of the SML as applied to individual stocks would show required rates of return on the vertical axis and standard deviations of returns on the horizontal axis. -If investors become more risk averse, then (1) the slope of the SML would increase and (2) the required rate of return on low-beta...
Q1Which of the following statements describes a risk averse individual when faced with income from a...
Q1Which of the following statements describes a risk averse individual when faced with income from a risky activity? 1.Group of answer choices 2.Her risk premium is positive 3.Her risk premium is negative 4.None of the above Q2Which of the following statements describes a risk loving individual when faced with income from a risky activity? 1.Her certainty equivalent is greater than the expected value of income from the risky activity 2.Her certainty equivalent is less than the expected value of income...
A risk-averse investor has an opportunity to invest in the following securities: Security A costs $10...
A risk-averse investor has an opportunity to invest in the following securities: Security A costs $10 today and will have a value of $25 if the market goes up and $0 if the market goes down; Security B costs $8 today and will have a value of $12 if the market goes up and $6 if the market goes down; and Security C costs $5 today and will have a value of $20 if the market goes up and –$20...
Which of the following statements is FALSE? Group of answer choices A large stock is typically...
Which of the following statements is FALSE? Group of answer choices A large stock is typically more volatile than a portfolio of large stocks. Investors would not choose to hold a portfolio that is more volatile unless they expected to earn a higher return. Smaller stocks have lower volatility than larger stocks.
Which of the following statements about London dispersion forces is/are true? Group of answer choices London...
Which of the following statements about London dispersion forces is/are true? Group of answer choices London dispersion forces are stronger between molecules of 1-butanol than between molecules of 2-methyl-2-propanol. London dispersion forces are stronger than hydrogen bonding interactions. both a and b neither a nor b How many different alkene products (counting cis and trans isomers of a compound as a single product) could be produced when 3-methyl-3-pentanol is dehydrated? Group of answer choices 1 2 3 4
4. Risk aversion Erik is an investor with $5,000 available for investment. He has the following three investment possibilities from which to choose: Option Scenarios Keep the $5,000 in cash for one year. Invest in a friend's business with a 50% chance of getting $10,000 after one year and a 50% chance of getting nothing. Invest in a relative's business with a 30% chance of getting $15,000 after one year, 20% chance of getting $2,500 after one year, 50% chance...
5. Risk aversion Erik is an investor with $5,000 available for investment. He has the folllowing three investment possibilities from which to choose: Option Scenarios Keep the $5,000 in cash for one year 1 2 Invest in a friend's business with a 50% chance of getting $10,000 after one year and a 50% chance of getting nothing Invest in a relative's business with a 3 30% chance of getting $15,000 after one year, 20% chance of getting $2,500 after one...
Most questions answered within 3 hours.
-
The mean waiting time at the drive-through of a fast-food
restaurant from the time an order...
asked 11 minutes ago -
The pitch (p) of a helix is defined as p = dn, in which n is...
asked 13 minutes ago -
Do you agree that the declining stock of social capital is the
blame for the failure...
asked 17 minutes ago -
A researcher is interested in whether coffee consumption helps
with performance on reading comprehension tasks. The...
asked 27 minutes ago -
it has been estimated since the beginning of the human race that
about 133 metric ton...
asked 32 minutes ago -
Where must Medicare prescription drug plans allow for
participants to fill their prescriptions?
asked 35 minutes ago -
Five moles of monatomic ideal gas have initial pressure 2.50 ×
103 Pa and initial volume...
asked 50 minutes ago -
A resistor and the capacitor are used to control the timing in
the RC circuit of...
asked 50 minutes ago -
Living in a group could bring several disadvantages to an
individual. What are some of the...
asked 1 hour ago -
Complete and balance the following reactions. In case of no
reaction occurring write NR.
Mix #1:...
asked 1 hour ago -
If an economy consumes 75% of any increase in income, then an
increase in autonomous investment...
asked 1 hour ago -
A shotputter throws the shot with an initial speed of 15.8 m/s
at a 38.0 ∘...
asked 1 hour ago