Question

When determining the value of a firm, which of the following statements is true? Investors are risk averse. Other things being equal, they prefer to pay more for stocks that are less risky and that have relatively more certain cash flows than other stocks. Investors love risk. Other things being equal, they prefer to pay more for stocks that are riskier and have uncertain cash flows. Investors are risk neutral. Other things being equal, they prefer to pay more for stocks that are less risky and have uncertain cash flows.

Answer 1

Investors are risk averse. Other things being equal, they prefer to pay more for stocks that are less risky and that have relatively more certain cash flows than other stocks

Step-by-step explanation:

A risk averse investor is an investor that would want lower returns from investments would lower risks

A risk neutral investor in neutral towards risks. They can invest in projects with high or low risks

A risk loving investor in an investor who prefers a person prefers risky return over guaranteed return