Asked by Janiel Samuels on May 07, 2024
Verified
The price of your investment increases 20% one month after you buy it. You do not believe that the stock's prospects have changed. Which one of the following actions would indicate the lowest amount of risk aversion?
A) You hang on to the stock, anticipating that it will go higher.
B) You buy more stock, anticipating that it will go higher.
C) You sell all of your stock holdings immediately.
D) You sell half of your stock holdings and invest the proceeds in other areas of your portfolio.
Risk Aversion
A trait or behavior exhibited by investors who prefer to avoid risk, choosing safer investments over riskier ones.
- Acknowledge the features of behavioral finance, particularly risk tolerance, at diverse stages in life.
Verified Answer
EG
Eliza GraceMay 13, 2024
Final Answer :
B
Explanation :
Buying more stock, anticipating that it will go higher, indicates a willingness to take on more risk for the potential of higher returns, showing the lowest amount of risk aversion.
Learning Objectives
- Acknowledge the features of behavioral finance, particularly risk tolerance, at diverse stages in life.
Related questions
Empirical Evidence Confirms That Investors Become ________ as They Approach ...
The Amount of Risk an Individual Should Take Depends on ...
_______ Is a Life Insurance Policy That Provides a Death ...
As the Typical Investor Ages, the Composition of His Wealth ...
Just 2 Months After You Put Money into an Investment ...