Author A accepts a $5,000 advance from a publisher and a 10% royalty after 5,000 books are sold. Author B foregoes the publisher's advance and negotiates for a 15% royalty on all books sold. Author C decides to self-publish his book and keep 100% of all sales revenue. In what order of risk aversion (from most to least)would you rank these authors?
A)Author A, Author B, Author C
B)Author A, Author C, Author B
C)Author B, Author A, Author C
D)Author C, Author B, Author A

Question

Quizplus · Accepted Answer

Author A is the most risk-averse, accepting a guaranteed advance and a lower royalty rate. Author B takes on more risk by foregoing the advance for a higher royalty rate from the first book sold. Author C assumes the most risk by self-publishing and relying solely on sales revenue.

Author a Accepts a $5,000 Advance from a Publisher and a 10