Given the expected return for Investment A and B is $5\%$ and $7\%$ respectively while their risk is predicted at $10\%$ and $12\%,$ which stock is preferred by a risk$-$averse investor?

A return is a theoretical profit or deficit that exists on balance, resulting from an investment that has not yet been sold for cash.

FINAL EXAM, SEMESTER $1,2022/2023$ SESSION

a investor require higher expected returns to compensate him for taking greater risk while $($b$)$ investor required returns does not change as risk changes.