Question

Most investors are risk-averse, which means they:

refuse to accept any financial risk.
require an increase in return for any increase in risk.
invest only in government insured securities.
gain satisfaction from the excitement of risk.

Answer 1

"Require an increase in return for any increase in risk"

Step-by-step explanation:

A risk-averse investor would not consider the choice to risk $1,000 loss with the possibility of making $50 gain to be the same risk as a choice to risk only $100 to make the same $50 gain.

A risk-averse individual has a low risk tolerance or a high risk aversion. These conservative investors are willing to accept little to no volatility in their investment portfolios. Investors who are looking for "safer" investments typically invest in savings accounts, bonds, dividend growth stocks and certificates of deposit (CDs).