Which three following statements are correct?
A) Risk averters prefer a more certain return to an alternative with an equal but more risky expected outcome.
B) Most investors in shares are risk averters.
C) Risk averters demonstrate diminishing marginal utility.
D) Risk averters expect companies to behave as risk lovers.

Question

Quizplus · Accepted Answer

A) Risk averters indeed prefer more certain returns over risky ones with the same expected outcome, as they value the certainty of the return more than the potential for higher returns. B) The majority of share investors can be classified as risk averters because they often seek investments that offer a balance of risk and return, rather than pursuing highly risky investments. C) The concept of diminishing marginal utility is a characteristic of risk aversion, where the utility gained from each additional unit of wealth decreases as wealth increases.

Which Three Following Statements Are Correct