Risk-Averse People Will Choose Different Asset Portfolios Than People Who

question 40

Multiple Choice

Risk-averse people will choose different asset portfolios than people who are not risk averse.Over a long period of time,we would expect that

• A)every risk-averse person will earn a higher rate of return than every non-risk-averse person.
• B)every risk-averse person will earn a lower rate of return than every non-risk-averse person.
• C)the average risk-averse person will earn a higher rate of return than the average non-risk-averse person.
• D)the average risk-averse person will earn a lower rate of return than the average non-risk-averse person.

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Definitions:

Financial Management

The strategic planning, controlling, organizing, and monitoring financial resources to achieve an organization's goals and objectives.

Current Value

The present worth of an asset or company based on market prices, as opposed to historical cost or book value; often used in gauging financial performance.

Existing Stock

The shares that are currently issued and outstanding in the market, referring to the stock previously sold to and held by the shareholders.