When Considering Different Investments, a Risk-Averse Investor Is Most Likely

question 45

Multiple Choice

When considering different investments, a risk-averse investor is most likely to focus on purchasing:

• A) investments with the greatest spread in the expected rate of return.
• B) investments that offer the lowest standard deviation in the investments' expected rates of return for any given expected rate of return.
• C) only risk-free investments.
• D) investments with the lowest risk premium, regardless of the expected rate of return.

---

Definitions:

Equal Payments

Fixed payments made consistently over the duration of a loan or mortgage agreement.

Loan Date

The date on which a loan agreement is executed and from which interest starts accruing.

Final Payment

The last payment made to settle the balance of a financial obligation.

Interest Rate

The rate at which borrowers are charged interest for the use of funds they have loaned from a lender.