When considering different investments, a risk-averse investor is most likely to focus on purchasing:
A) investments with the greatest spread in the expected rate of return.
B) investments that offer the lowest standard deviation in the investments' expected rates of return for any given expected rate of return.
C) only risk-free investments.
D) investments with the lowest risk premium, regardless of the expected rate of return.

Question

Quizplus · Accepted Answer

Risk-averse investors prioritize stability and are likely to choose investments with the lowest standard deviation in returns, as this indicates less volatility and more predictability in the investment's performance.

When Considering Different Investments, a Risk-Averse Investor Is Most Likely