Analyze the scenarios below and decide what type of investors is given in the scenario. Choices are given below:Mrs. Santos decided to invest her P 500,000 in a bonds issued by Jollibee Foods Corporation rather than invest it in a regular savings account.*Risk-Neutral InvestorsRisk-Averse InvestorsRisk - Taker Investors
Question
Analyze the scenarios below and decide what type of investors is given in the scenario. Choices are given below:Mrs. Santos decided to invest her P 500,000 in a bonds issued by Jollibee Foods Corporation rather than invest it in a regular savings account.*Risk-Neutral InvestorsRisk-Averse InvestorsRisk - Taker Investors
Solution
Based on the scenario given, Mrs. Santos can be considered a Risk-Averse Investor. Here's why:
Risk-Averse Investors are those who prefer safer, less risky investments. They are willing to accept lower returns for the assurance of getting their initial investment back. In this case, Mrs. Santos chose to invest her money in bonds issued by Jollibee Foods Corporation, which is generally considered a safer investment compared to other options like stocks. This is because bonds are essentially loans that the investor makes to the issuer (in this case, Jollibee Foods Corporation), and the issuer is obligated to pay back the loan with interest. This is less risky than investing in a regular savings account, which can be subject to bank failures or other risks. Therefore, Mrs. Santos is a Risk-Averse Investor.
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