Answer to Question #206733 in Microeconomics for Master P

Question

Considering the importance of risk, which alternative should an investor choose?

Answer 1

An investor should choose a low risk investment because this investment guarantees a reasonable return with a very minimal chance that any of the original investment will be lost.

A low risk investment is considered the most stable investment.

An investor should be risk averse ,that is, the investor should choose to preserve capital over the potential higher than average return.