Evidence that most investors are risk averse is that they
A) buy a diversified portfolio.
B) buy different bonds with the same yield and maturity.
C) put most of their funds in one company's stock.
D) like to gamble.

Question

Quizplus · Accepted Answer

Buying a diversified portfolio is a strategy used by investors to spread their risk across different assets and reduce the impact of individual asset performance on their overall portfolio. This shows that most investors are risk averse and prefer to not put all their eggs in one basket. Option B is not a clear indicator of risk aversion as buying different bonds with the same yield and maturity is a common strategy for fixed income investors seeking to create a bond ladder. Option C is not a common behavior among most investors as it exposes them to high concentration risk. Option D is also not an indicator of risk aversion as gambling is a high-risk activity that most investors would typically avoid.

Evidence That Most Investors Are Risk Averse Is That They