How comfortable an investor is with risk is called his or her risk avoidance TRU

Question

How comfortable an investor is with risk is called his or her risk avoidance TRUE OR FALSE US government securities are considered the lowest risk investments TRUE OR FALSIE Individuals who like to gamble and take big risk are considered risk tolerant TRUE OR FALSE Default risk is the risk that a company will not repay a loan TRUE OR FALSE The risk threshold measures the amount investors must be paid to take on some level of risk TRUE OR FALSE The standard deviation is the square root of the variance are two different concepts and measurements TRUE OR FALSE Competition can impact firm-specific risk TRUE OR FALSE Of an FDIC-insured savings account and a corporate bond, the FDIC-insured savings account has the higher level of risk TRUE OR FALSE When graphing the risk-reward relationship with risk on the x-axis and reward on the y-axis you will have an downward sloping line TRUE OR FALSIE If an investment earns something different from what he/she was expecting, the investment has risk. TRUE OR FALS

Explanation / Answer

1) this statement is FALSE because how comfortable an investor is with risk is called risk tolerance

2) this statement is TRUE because government has the power to print money in worst case scenario and the risk free rates that are quoted are in reference to these securities . hence U.S. securities are considered the lowest risk investments

3) this statement is TRUE because indulging in gambling means that a person is comfortable in taking the risk and hence is risk tolerant

4) default risk is the risk that the company may not honour its fixed obligations like a loan. Hence this statement is TRUE

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