BUISENESS MANAGEMENT
RISK MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Risk Averse Producers
|
|
|
Risk neutral producers
|
|
|
Risk preferring individuals
|
|
|
Daredevils
|
Detailed explanation-1: -Description: A risk averse investor avoids risks. S/he stays away from high-risk investments and prefers investments which provide a sure shot return. Such investors like to invest in government bonds, debentures and index funds.
Detailed explanation-2: -Exhibiting risk aversion means to shy away from risk, and in terms of investing means avoiding risky securities. Risk averse individuals should seek out investments and strategies that fit this low risk tolerance. As such, one advantage is that the risk of losses are minimized.
Detailed explanation-3: -In the field of behavioral decision-making, “loss aversion” is a behavioral phenomenon in which individuals show a higher sensitivity to potential losses than to gains. Conversely, “risk averse” individuals have an enhanced sensitivity/aversion to options with uncertain consequences.
Detailed explanation-4: -The tendency of an economic agent to strictly prefer certainty to uncertainty. Written by CFI Team. Updated February 1, 2023.