Choice "A" is correct. Risk averse behavior describes managers who demand more return on an investment as risk increases. These managers expect to be compensated for increased risk.
Choice "d" is incorrect. Risk indifferent behavior describes a manager who is neutral with regard to the return associated with a particular investment. Typically, the amount of a risk free rate of return associated with an investment of a given amount compared to a higher return associated with higher risk is viewed as having equal value.
Choice "b" is incorrect. Risk seeking behavior describes managers who seek reduced return for higher risk.
Choice "c" is incorrect. The term "cautious" is a distracter. Although caution is an attitude, it is not a technical term.
