Which of the following statements is(are) true?I) Risk-averse investors reject investments that are fair games.II) Risk-neutral investors judge risky investments only by the expected returns.III) Risk-averse investors judge investments only by their riskiness.IV) Risk-loving investors will not engage in fair games.
A) I only
B) II only
C) I and II only
D) II and III only
E) II, III, and IV only

Question

Quizplus · Accepted Answer

I) True, risk-averse investors prefer not to engage in investments that have an expected net outcome of zero (fair games), as they prefer to avoid risk. II) True, risk-neutral investors are indifferent to risk and make decisions based solely on expected returns, not the risk involved. III) False, risk-averse investors consider both the risk and the expected returns of investments, not just their riskiness. IV) False, risk-loving investors are attracted to risk and may engage in fair games for the possibility of higher returns.

Which of the Following Statements Is(are) True?I) Risk-Averse Investors Reject