ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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risk averse
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risk loving
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risk neutral
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risk reverse
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Detailed explanation-1: -Risk aversion is the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly lower, expected payoff.
Detailed explanation-2: -Definition: A risk averse investor is an investor who prefers lower returns with known risks rather than higher returns with unknown risks. In other words, among various investments giving the same return with different level of risks, this investor always prefers the alternative with least interest.
Detailed explanation-3: -Examples of risk-averse behavior are: An investor who puts their money into a bank account with a low but guaranteed interest rate, rather than buy stocks, which can fluctuate in price but potentially earn much higher returns.