Q. Which of the following is not a characteristic of a risk averter? (Solved)
1. A risk averter will not buy lottery tickets because the expected payoffs are less than the cost of the tickets.
2. A risk averter will be ready to pay a higher price for an asset whose variance increases.
3. A risk averter always prefers a certain investment over an uncertain investment if the expected returns on the two investments are identical.
4. To be induced to take risk, a risk averter must be offered a risk premium.
- b. A risk averter will be ready to pay a higher price for an asset whose variance increases.