All else equal,investors who are risk averse will pay more for a security with a higher level of risk.

Question

Quizplus · Accepted Answer

This statement is false. Risk-averse investors are willing to pay more for a security with a lower level of risk, as they prioritize the preservation of their capital over potential returns. They seek safety and security in their investments, and therefore prefer low-risk investments that offer a certain level of stability and predictability. Higher-risk investments, which offer potentially higher returns, are generally not favored by risk-averse investors.

All Else Equal,investors Who Are Risk Averse Will Pay More