Which of the Following Statements Is (Are)true About Risk Aversion

question 34

Multiple Choice

Which of the following statements is (are) true about risk aversion?

• A)Risk-averse investors would be indifferent between investing in a risk-free investment that will earn 4% or a risky asset that has a 50% chance of earning 8% and a 50% chance of
• Returning 0%.
• B)Risk-averse investors should accept only fair bets.
• C)The effective risk-aversion of a group of investors is less than the risk aversion of any single investor.
• D)Both A and B are true.

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Definitions:

Persistence

The continued or prolonged existence of something, often in spite of challenges or difficulty.

Relearning

A measure of memory that assesses the amount of time saved when learning material again.

Recognition

The process of identifying something previously seen, known, or experienced, often used in the context of memory recall.

Relearning

The process by which one regains knowledge or skills that were previously learned but then forgotten.