AAFM Exam GLO_CWM_LVL_1 Topic 1 Question 99 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 99
Topic #: 1

A Treasury bill pays a 6% rate of return. A risk averse investor __________ invest in a risky portfolio that pays 12% with a probability of 40% or 2% with a probability of 60% because __________.

AMight; she is rewarded a risk premium

BWould not; because she is not rewarded any risk premium

CWould not; because the risk premium is small

DCannot be determined

Show Suggested Answer

Suggested Answer: C

by Rima at Feb 10, 2025, 12:33 AM

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Ceola

1 days ago

I agree with Ressie. The risk premium is important for risk averse investors to consider before making investment decisions.

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Ressie

3 days ago

I think a risk averse investor would not invest in a risky portfolio that pays 12% with a probability of 40% or 2% with a probability of 60% because she is not rewarded any risk premium.

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