How do economists define expected return and risk?

A$.$ Risk is the price of an asset a year from now, while expected return is the degree of uncertainty in the return a year from now.

B$.$ Expected return is the price of an asset a year from now, while risk is the degree of uncertainty in the return a year from now.

C$.$ Risk is the return expected on an asset during a future period, while expected return is the degree of uncertainty in the return on an asset.

$\text{'}$D$.$ Expected return is the return expected on an asset during a future period, while risk is the degree of uncertainty in the return on an asset.

What is meant by the term "risk averse"?

A$.$ It refers to investors who prefer risk to safe investments, meaning that risk$-$averse investors would choose gambling over any form of investment.

B$.$ It refers to investors who have an aversion to risk, meaning that when choosing between two assets with the same expected returns, risk$-$averse investors would choose

the asset with the lower risk.

C$.$ It refers to investors who prefer risk to safe investments, meaning that when choosing between two assets, risk$-$averse investors would choose the asset with the

possibility of maximizing return.

D$.$ It refers to investors who have an aversion to risk, meaning that when choosing between two assets, risk$-$averse investors would ignore risk and only consider expected

return.

Investors are typically

$,$ which leads to the observations that a trade$-$off exists between risk and