Case in which average investors risk aversion is greater than slope of line and risk premium respectively is?

Question

Case in which average investors risk aversion is greater than slope of line and risk premium respectively is?

steeper, greater
steeper, smaller
steeper, zero
Both A and B

LohaHridoy

5 views

2025-01-04 04:42

1 Answers

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AhmedNazir · Accepted Answer · 2022-09-01T13:21:41+06:00

Answer: Option 1

Case in which average investors risk aversion is greater than slope of line and risk premium respectively is steeper, greater. Risk aversion means that investors will tend to purchase safe assets like highly rated bonds and CDs. Risk-averse individuals seek capital preservation over growth, which may actually be detrimental for those who are younger.