A person who is risk neutral will
A)pay a small risk premium when making a choice.
B)pick a slightly less risky option with a slightly lower expected value.
C)pick the option with the highest expected value.
D)None of the above.

Question

Quizplus · Accepted Answer

A person who is risk neutral is not concerned with or affected by risk. Therefore, their decision-making process is solely based on maximizing expected value. They will always choose the option with the highest expected value, regardless of the level of risk involved or any potential risk premium that may be offered.

A Person Who Is Risk Neutral Will