If an individual makes her investment decisions based solely on the Expected Value criterion, one can conclude that she is
A)risk averse.
B)risk neutral.
C)risk loving.
D)extremely wealthy.

Question

Quizplus · Accepted Answer

The Expected Value criterion assumes that an individual is risk neutral, meaning that they do not consider the level of risk when making decisions and only focus on the potential return. If the individual was risk averse, they would prefer to choose options with lower risk and lower returns, while if they were risk loving, they would prefer options with higher risk and higher returns. However, the Expected Value criterion assumes they only consider the expected return and not the level of risk. The information presented does not provide any indication of their wealth, so D cannot be the answer.

If an Individual Makes Her Investment Decisions Based Solely on the Expected