Which of the following statements about the ‘What is Risk?’ section of the lecture material based on the diagram below are TRUE:

A risk-averse individual would always prefer A to B because they both offer the same expected reward while B has a higher level of risk than A.
A risk-averse individual would always prefer A to C because A has a significantly lower level of risk than C.

Question

Which of the following statements about the ‘What is Risk?’ section of the lecture material based on the diagram below are TRUE: 
 
 A risk-averse individual would always prefer A to B because they both offer the same expected reward while B has a higher level of risk than A. 
 A risk-averse individual would always prefer A to C because A has a significantly lower level of risk than C.

Answer

Neither of the statements are true (both are false)

Answer

Only statement 1 is true

Answer

Only statement 2 is true

Answer

Both statements are true (neither are false)

Crowdly

Which of the following statements about the ‘What is Risk?’ section of the lectu...

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