Someone who is risk averse has a general dislike for risk and a preference for certainty. If risk aversion exists in the market, then investors in general are willing to accept somewhat lower returns on less risky securities$.$ Different investors have different degrees of risk aversion, and the end result is that investors with greater risk aversion tend to hold securities with lower risk $($and therefore a lower expected return$)$ than investors who have more tolerance for risk.

True

False

Question $9(10$ points$)$

Roenfeld Corp believes the following probability distribution exists for its stock. What is the sharpe ratio on the company's stock? The risk$-$free interest rate is $5\%.$

$\backslash$table$[[\backslash$table$[[$State of$],[$the Economy$]],$Probability,Stock's$],[$of State,Expected$],[$Occurring$,$Return$],[$Boom$,0\mathrm{.}19,25\%$