Question

Your uncle has 100,000 SGD to invest in one fund. If he is risk neutral, which fund does he invest in?

	Return	St. Dev
China	0.21	0.45
Europe	0.12	0.32
United States	0.09	0.17
Treasury Bill	0.01	0

Answer 1

Risk neutral investors means a Risk neutral is a term that is used to describe investors who are insensitive to risk. The investor effectively ignores the risk completely when making an investment decision. If you present a risk neutral investor with possible investments that carry different levels of risk, he considers just the expected return from each investment – their risks are irrelevant to him or her.