Scenario: Three investment options are available in a market. All three options provide the same expected rate of return but have different levels of risk associated with them. Investing in Option A is the riskiest, while investing in Option C is the safest. Option B has a moderate level of risk associated with it.
-Refer to the scenario above.Which investment option will a risk-averse individual choose?

Question

Quizplus · Accepted Answer

A risk-averse individual would prefer to choose the investment option with the lowest level of risk, which in this case is Option C. They are willing to sacrifice potential higher returns for a safer investment. Option A's high level of risk would not be appealing to a risk-averse individual, and they would likely not want to take on the moderate risk of Option B either. Thus, Option C is the best choice for a risk-averse individual.

Scenario: Three Investment Options Are Available in a Market