Risk-averse investors require higher rates of return on investments whose returns are highly uncertain, and most investors are risk averse.

Question

Quizplus · Accepted Answer

This statement is true. Risk-averse investors prefer investments with more certain returns and therefore require higher rates of return on investments that are more uncertain to compensate for the added risk. Most investors tend to be risk averse to some degree, leading them to seek similar compensating returns for higher-risk investments.

Risk-Averse Investors Require Higher Rates of Return on Investments Whose