Question
Imagine that there are two states of nature - low and high.Both are equally likely to occur.Consider two assets the first pays 10 in the
Imagine that there are two states of nature - low and high.Both are equally likely to occur.Consider two assets the first pays 10 in the low state and 20 in the high state.The second pays 5 in both states of nature.Which of the two assets is riskier?
Group of answer choices
the first
the second
it depends on the degree of risk aversion of a typical asset holder
both are equally risky
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Foundations of Macroeconomics
Authors: Robin Bade, Michael Parkin
6th edition
132831007, 978-0132831000
