If an individual makes her investment decisions based solely on the Net Present Value criterion,one can conclude that she is
A) risk averse.
B) risk neutral.
C) risk loving.
D) extremely wealthy.

Question

Quizplus · Accepted Answer

The Net Present Value (NPV) criterion is used to determine whether an investment is economically attractive or not. If the NPV is greater than zero, then the investment is accepted. If it is less than zero, then the investment is rejected. A person who makes investment decisions based solely on the NPV criterion is not considering the risk associated with the investment. Therefore, she is risk-neutral.

If an Individual Makes Her Investment Decisions Based Solely on the Net