Risk neutral valuation assumes that investors are risk neutral, hence it is not applicable in real world asset pricing

Finance Oct 02, 2020

Risk neutral valuation assumes that investors are risk neutral, hence it is not applicable in real world asset pricing. Because in real world, Investors are risk averse The statement is true. The statement is false, because in real world, investors can be risk neutral The statement is false, because risk neutral is a technical assumption. All of the above are incorrect. Question 17 of 25 Moving to another question will save this response.

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The statement is false because in Real world investors can be risk-neutral

The correct answer is B

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