A fair game
A) will not be undertaken by a risk-averse investor.
B) is a risky investment with a zero risk premium.
C) is a riskless investment.
D) will not be undertaken by a risk-averse investor and is a risky investment with a zero risk premium.
E) will not be undertaken by a risk-averse investor and is a riskless investment.

Question

Quizplus · Accepted Answer

A fair game is a risky investment with an expected return of zero over the risk-free rate, meaning it has a zero risk premium. Risk-averse investors typically avoid such investments because they prefer to minimize risk, even if it means accepting lower returns.

A Fair Game