Question

A consumer who is risk neutral is best characterized as ______________________________________________________. Multiple Choice a.a consumer who prefers high risk regardless of expected gains b.a consumer who may accept a risky prospect even if the expected gain is negative c.a consumer who completely ignores risk and makes his or her decisions based solely on expected values d.a consumer who demands a positive expected gain as compensation for taking risk

Answer 1

Option D. A consumer who demands a positive expected gain as compensation for taking risk

Step-by-step explanation:

The reason is that the risk neutral investors are neither risk averse who takes lesser risks nor risk takers. They take the risks that they think will increase their wealth with average risk levels and hence expect positive results and returns for taking this risk.