Someone Who Is Risk Averse Has a General Dislike for Risk

question 12

True/False

Someone who is risk averse has a general dislike for risk and a preference for certainty.If risk aversion exists in the market, then investors in general are willing to accept somewhat lower returns on less risky securities.Different investors have different degrees of risk aversion, and the end result is that investors with greater risk aversion tend to hold securities with lower risk (and therefore a lower expected return) than investors who have more tolerance for risk.

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Definitions:

Semantic Memory

Semantic Memory is a type of long-term memory involving the capacity to recall words, concepts, or numbers, which is essential for understanding language and facts.

Episodic Memory

An enduring memory type that encompasses the recall of specific instances, settings, and personal encounters.

Retroactive Interference

Situation in which material that was learned later disrupts the retrieval of information that was learned earlier.

Memory Retrieval

The act of retrieving or summoning back to awareness information stored in memory.