Risk-averse investors require higher rates of return on investments whose returns are highly uncertain, and most investors are risk averse.

Question

Quizplus · Accepted Answer

This statement is true. Risk-averse investors prefer investments with more certain returns and will demand a higher rate of return for investments with uncertain or volatile returns. This is because risk-averse investors want to be compensated for the greater risk they are taking on with their investment.

Risk-Averse Investors Require Higher Rates of Return on Investments Whose