When we say that rational investors are risk-averse, it means the investor does not like risk...
When we say that rational investors are risk-averse, it means the investor does not like risk and would consider a higher risk project only if the expected return from that project is sufficient to compensate for the higher risk.
True
False
When investors require higher rates of return for investments that have higher variability of returns, this is evidence of risk aversion.
True
False
Homework Answers
!. True . Risk averse investor demands that return should be
higher for lower risk
2.False. Variability should be slow.
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