An individual will be considered risk neutral if:
A)he is indifferent between taking and not taking up the gamble.
B)he pays someone to take away the gamble from him.
C)he pays someone to allow him to take the gamble.
D)he takes up the gamble under any situation.

Question

Quizplus · Accepted Answer

A risk-neutral individual is someone who is indifferent between taking and not taking up a gamble, which means they are willing to take on any level of risk as long as the expected value of the gamble is positive. Choice B and C imply risk-averse behavior where the individual is willing to pay to avoid or take a lower risk. Choice D is risky behavior regardless of the expected value of the gamble.

An Individual Will Be Considered Risk Neutral If