Business, 22.10.2019 22:00 Senica

Erik is an investor with $5,000 available for investment. he has the following three investment possibilities from which to choose: option scenarios 1 keep the $5,000 in cash for one year. 2 invest in a friend’s business with a 50% chance of getting $10,000 after one year and a 50% chance of getting nothing. 3 invest in a relative’s business with a 30% chance of getting $15,000 after one year, 20% chance of getting $2,500 after one year, 50% chance of getting nothing. suppose erik cares about the risk involved in options 2 and 3, and decides to select option 1 because it has no risk. which of the following statements would be true about erik? he is risk-averse. he is risk-neutral. he is risk-loving. none of these descriptions is accurate. later, while examining the same investment alternatives, erik’s brother, devin, clearly expressed a preference for option 1. which of the following statements is true about devin? he is risk-averse. he is risk-neutral. he is risk-loving. none of the above.

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Erik is an investor with $5,000 available for investment. he has the following three investment poss...

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