Erik is an investor with $5,000 available for investment. He has the following three investment possibilities from which to choose:

Option	Scenarios
1	Keep the $5,000 in cash for one year.
2	Invest in a friends business with a
	50% chance of getting $10,000 after one year and a
	50% chance of getting nothing.
3	Invest in a relatives business with a
	30% chance of getting $15,000 after one year,
	20% chance of getting $2,500 after one year,
	50% chance of getting nothing.

If Erik is indifferent about these three investment options, and he thinks that they are worth the same to him. Therefore, which of the following statements is true about Erik?

He is risk-neutral.

He is risk-averse.

He is risk-loving.

None of the above.

Later, while examining the same investment alternatives, Eriks brother, Devin, clearly expressed a preference for Option 1. Which of the following statements is true about Devin?

He is risk-averse.

He is risk-neutral.

He is risk-loving.

None of the above.