A typical investor is assumed to be:
a single security holder.
A typical investor is assumed to be Risk averse.
A risk averse investor is one, which would choose among two securities, the one which gives a lower level of risk exposure even though the expected return on both the securities is similar. Risk averse investors will not want to take fair gambles So, he is not a gambler. so option 1 is incorrect.
A risk averse investor is an investor who prefers lower returns with known risks rather than higher returns with unknown risks.
So, the correct option is option 4.
Investors are always assumed to rational and informed so option1 is incorrect and investors can hold more than one security , so he is not a single security holder and is also not risk neutral. Investors are assumed to be risk averse.
Get Answers For Free
Most questions answered within 1 hours.