Risk aversion helps to explain various things we observe in the economy,including
A)adherence to the old adage,"Don't put all your eggs in one basket."
B)insurance.
C)the risk-return trade-off.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Risk aversion influences people's behavior to diversify their investments (adherence to the old adage), purchase insurance to protect against unforeseen events, and consider the trade-off between expected returns and the level of risk they are willing to take. Therefore, all of the above are correct.

Risk Aversion Helps to Explain Various Things We Observe in the Economy,including