Smith and Jones are different when it comes to taking risk. Smith will assume much more risk than Jones. It follows that

Question

Quizplus · Accepted Answer

Assuming more risk typically means a higher probability of both higher returns and lower returns. Therefore, Smith has a higher probability than Jones of earning both a higher income (due to the potential high returns of riskier investments) and a lower income (due to the potential losses associated with higher risk).

Smith and Jones Are Different When It Comes to Taking