An investor is indifferent between receiving $10,000 or a gamble where there is a 50% chance of getting SO and a 50% chance of getting $20,000. The investor is
A) risk seeking.
B) risk taking.
C) a speculator.
D) risk neutral.

Question

Quizplus · Accepted Answer

The fact that the investor is indifferent implies that the investor is not willing to take on any risk for greater potential return, nor is the investor avoiding risk at all costs. This is the definition of being risk neutral.

An Investor Is Indifferent Between Receiving $10,000 or a Gamble