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Ben's risk version is Maria's risk aversion is very low. They are both working for the University of Wisconsin systern and they can invest a
Ben's risk version is Maria's risk aversion is very low. They are both working for the University of Wisconsin systern and they can invest a percentage of their salary in two funds . The first fund is called the Money Market fund (MM . The Money Market offers a low rate of return but the investment is guaranteed (there is no risk.) The second is called Socially Responsible Market fund ( SRM )Which statement is true ?
Maria will invest in the SRM fund than Ben
in the long run, we expect Ben to earn higher returns because he will take more risk.
Theory says that no metter how you allocate your capital between the risk and risk-free assets , you always earn the same retur
We know for a fact that Maria will make more profits Ben will invest exclusively in the MM fund .
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