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Which of the following investments would a risk-averse investor prefer if the risk-free rate is zero? Value of Investment if: Investment Cost Today Market Return
Which of the following investments would a risk-averse investor prefer if the risk-free rate is zero?
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| Value of Investment if: | |
| Investment | Cost Today | Market Return > 0% Probability: 40% | Market Return < 0% Probability: 60% |
| I | $20 | $20 | $20 |
| II | $15 | $30 | $0 |
| III | $0 | -$10 | $10 |
III only
II only
I and III only
I only
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