Which of the following best describes a risk-averse individual?
A) He would rather spend all his money than risk it in investments.
B) He would rather put $100 in a bank account earning 10 percent than in a one-year government bond earning 10 percent.
C) He would rather have $10 in his pocket than gamble on a coin toss in which heads yields $20 and tails yields nothing.
D) He would rather put $100 in a bank at 10 percent interest than in a stock with a 10-percent dividend and 50-50 chance of a 25-percent increase or decrease in the value of the stock.
E) He does not trust banks.
Correct Answer:
Verified
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