Risk- aversion of an investor can be measured by:

I agree with Mr. Kamman. A risk-averse investor would be reluctant to invest in a high return, high risk investment, so definitely he would look for a safe investment although it would generate a lower return. He would be interested to know the risk-free rate of return.

Investors demand returns that are too high given risk aversion estimates and the stability of wealth.

Market Rate of Return (higher priority)

followed by:     Risk-free Rate of Return and  Portfolio Return

Risk averse investor tries to avoid risk as much as possible. So he will opt for investment in the following order:

1) Risk-free Rate of Return

2) Market Rate of Return / Portfolio Return

The measures of risks are variations and standard deviation, r-squared etc . This gives an investor an idea how likely he will gain or lose based on how dispersed the historical data are . Rate of return only measures how much he earned out of his investment. If the rates of return over a period of time did not change significantly, then it is less risky. Normally, a risk-averse investor would choose lower risk even if it comes with lower return. My answer is D none of the above.

None of the Above, Sir

Thanks i hope that you are ok  divyesh

option B & C

B 1st then C2nd.

a- Market Rate of Return

b- Risk-free Rate of Return

c- Portfolio Return

Well explained by the lady but it can not be measure. So Option D

 

D) None of the above

a