ck the correct statement: a. The Risk Premium is always positive. b. The Risk Premium is the additional wealth that the investor needs to get in every state of the world so that the expected utility of the risky portfolio is equal to the utility from getting the average wealth of the portfolio for sure. c. The Risk Premium is the level of wealth that the investor needs to obtain for sure in order to have the same expected utility as the risky portfolio.
ck the correct statement: a. The Risk Premium is always positive. b. The Risk Premium is the additional wealth that the investor needs to get in every state of the world so that the expected utility of the risky portfolio is equal to the utility from getting the average wealth of the portfolio for sure. c. The Risk Premium is the level of wealth that the investor needs to obtain for sure in order to have the same expected utility as the risky portfolio.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Pick the correct statement:
a. The Risk Premium is always positive.
b. The Risk Premium is the additional wealth that the investor needs to get in every state of the world so that the expected utility of the risky portfolio is equal to the utility from getting the average wealth of the portfolio for sure.
c. The Risk Premium is the level of wealth that the investor needs to obtain for sure in order to have the same expected utility as the risky portfolio.
d. The Risk Premium is always positive for risk loving investors.
Expert Solution
Step 1
Risk premium is related to return that one should get it for taking risk.
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