The certainty equivalent approach is a risk evaluation technique.Which of the following statements is/are correct?
A)Only statement I is correct
B)Only statement II is correct
C)Both statements I and II are correct
D)Neither statement I nor II is correct

Question

Quizplus · Accepted Answer

The certainty equivalent approach is a risk evaluation technique that involves finding the certain amount of money that an individual would be willing to accept in lieu of a risky prospect. This approach is based on the assumption that individuals are risk-averse and that they prefer certainty to uncertainty.

The Certainty Equivalent Approach Is a Risk Evaluation Technique