Question

The following is not an example of risk aversion a. ​Individuals tend to gamble more with their money when the future is uncertain b. ​you only go swimming when the lifeguard is on duty c. ​you are more careful when you buy a more expensive car d. ​you lock your garage when you have expensive workshop tools

Answer 1

Answer:

The correct answer is letter "A": ​Individuals tend to gamble more with their money when the future is uncertain.

Explanation:

Risk aversion in Finance describes an investor who is just willing to accept a small level of risk on his investments. A risk-averse investor likes less risk and is prepared to accept fewer returns because of his choice. In a few words, risk aversion represents the likelihood investors prefer to secure their investments instead of risking more expecting higher returns.

Thus, individuals gambling more when the future is uncertain reflects an opposite scenario to risk aversion.