A risk-averse investor will:

Question

Quizplus · Accepted Answer

A risk-averse investor is someone who is more concerned about protecting their capital than taking risks to generate higher returns. Therefore, they are likely to opt for investments that provide a more stable or lower risk-return trade-off. However, in some cases, they might be willing to accept a slightly lower expected return if it means less risk to their investment. To imply that they would always accept a greater risk with a greater expected return (choice A) is not entirely correct, as it depends on their risk tolerance and the specifics of the investment opportunity. Likewise, they might not only invest in assets providing certain returns (choice B) as there is always some degree of uncertainty and risk involved in investing. Finally, to state that they would never accept lower risk if it means accepting a lower expected return (choice C) is not accurate since risk-averse individuals are typically focused on minimizing downside risk rather than maximizing returns.

A Risk-Averse Investor Will