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Erik is an investor with $ 5 , 0 0 0 available for investment. He has the following three investment possibilities from which to choose:
Erik is an investor with $ available for investment. He has the following three investment possibilities from which to choose:
tableOptionScenariosKeep the $ in cash for one year.Invest in a friend's business with a chance of getting $ after one year and a chance of getting nothing.,Invest in a relative's business with a chance of getting $ after one year,, chance of getting $ after one year,, chance of getting nothing.,
Suppose Erik cares about the risk involved in options and and decides to select option because it has no risk. Which of the following statements would be true about Erik?
He is riskaverse.
He is riskneutral.
He is riskloving.
None of these descriptions is accurate.
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