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Basic Question 5 of 16
Which of the following statements is (are) true?
II. Risk-neutral investors judge risky investments only by the expected returns.
III. Risk-averse investors judge investments only by their riskiness.
IV. Risk-seeking investors will not engage in fair games.
I. Risk-averse investors reject investments that are fair game.
II. Risk-neutral investors judge risky investments only by the expected returns.
III. Risk-averse investors judge investments only by their riskiness.
IV. Risk-seeking investors will not engage in fair games.
User Contributed Comments 8
| User | Comment |
|---|---|
| poomie83 | Why is III not true? |
| hoyleng | risk adverse investors go for high return with minimal risk |
| jonan203 | fair games? i don't recall reading that anywhere... |
| robertucla | What the hell are fair games? |
| gill15 | Fair games is Flipping a coin....Risk neutral go for fair games. |
| PSVC | Fair game = an investment prospect that has a zero risk premium. Therefore investment without higher return for more risk. Risk Averse investors avoid Fair game. |
| merc5559 | Why is IV true? I thought risk seekers went for worse odds than fair games. |
| seeyize | @merc5559 IV is NOT true, because risk seekers WILL engage in fair games |
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Learning Outcome Statements
explain risk aversion and its implications for portfolio selection
CFA® 2024 Level I Curriculum, Volume 2, Module 1.