The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-In order to induce risk-averse people to invest in risky ventures, an additional sum of money is often paid to them along with the return.

Question

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2
 
-In order to induce risk-averse people to invest in risky ventures, an additional sum of money is often paid to them along with the return.

Quizplus · Accepted Answer

This statement refers to the concept of risk premium, which is an additional amount paid to investors to compensate for the higher risk of investing in a risky venture. Risk-averse people are more likely to be attracted to investing in such ventures if they are offered a higher return that includes a risk premium.

The Figure Given Below Shows the Demand [D and D']