Robert Is Risk Averse and Has $1,000 with Which to Make

question 5

Multiple Choice

Robert is risk averse and has $1,000 with which to make a financial investment.He has three options.Option A is a risk-free government bond that pays 5 percent interest each year for two years.Option B is a low-risk stock that analysts expect to be worth about $1,102.50 in two years.Option C is a high-risk stock that is expected to be worth about $1,200 in four years.Robert should choose

• A)option a.
• B)option B.
• C)option C.
• D)either A or B because they are the same to him.

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Definitions:

Revoke

To take back or withdraw an offer, right, or privilege.

Resulting Trust

A trust implied by law when property is transferred under circumstances suggesting the transferor does not intend the recipient to have beneficial interest in the property.

Express Trust

A trust created either while the settlor is alive or by will.

Created

Brought into existence; originated or produced something new.