Which of the Following Two Investments Would a Risk Seeker

question 24

Multiple Choice

Which of the following two investments would a risk seeker choose: Investment A with an expected outcome of $1000 and standard deviation of $500,or Investment B with an expected outcome of $1000 and standard deviation of $200?

• A)Investment A because if Investment B is chosen the expected utility from the increase in spread of expected returns below $1000 outweighs the expected utility from the increase in spread of expected returns above $1000.
• B)Investment A because it offers the chance of more wealth.
• C)Investment A because the downside risk is greater.
• D)Investment B because the downside risk is less.

---

Definitions:

Conflict

A clash of opinions or interests; a fight or struggle; an inner moral struggle; to come into opposition; a disagreement or disharmony that occurs in groups when differences regarding ideas, methods, and members are expressed.

Disagreement

A situation where two or more parties have a difference in opinion or perspective.

Disharmony

A lack of agreement or consistency, often leading to conflict or disorder within a group or system.

Groups

Collections of individuals united by certain relations or shared interests.