Suppose There's an 80% Chance of a Stock Rising by 20

question 39

Multiple Choice

Suppose there's an 80% chance of a stock rising by 20% and a 20% chance of it falling by 40%. Which type of investor would prefer an investment with a guaranteed return of 5%?

• A)risk loving investor
• B)risk neutral investor
• C)risk averse investor
• D)risk is not relevant in this example

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