Mini-Case Sergio Gonzales Is Employed by Bigbux National Bank, One of of the Largest

Multiple Choice

Mini-Case
Sergio Gonzales is employed by Bigbux National Bank, one of the largest banks in the Midwest. He is a loan officer, specializing in home equity loans. Tio Raul, Sergio's favorite (and wealthiest) uncle, passed away last month and left Sergio a sizable amount of money. Sergio is looking at the best way to invest his newly acquired wealth. He is considering many options, ranging from simply putting the money into a savings account to the possibility of starting his own business. Although his bank job pays well and offers pleasant working conditions, Sergio is frustrated because he has little freedom or flexibility to deal with customers since every decision he makes must be approved by his supervisor. Besides, he's a bit bored and looking for a challenge. He thinks he might get a lot of satisfaction from owning his own business. Sergio has not made a definite decision yet, but has talked to a lot of people searching for a good idea for a new business. If he can come up with an idea he likes, he might just quit his current job and use his inheritance to go into business for himself!
-As he explores his options, Sergio notices that some opportunities appear to be riskier than others. When considering various opportunities, Sergio should keep in mind that:

A) he will be better off picking a low risk business opportunity, since the safest ones are usually the most profitable as well.
B) even though some opportunities appear riskier than others, the level of risk actually varies little from one opportunity to another.
C) high risk business opportunities often have the potential for high returns as well.
D) government regulations are in place to protect investors and entrepreneurs from failure, so there is no need to worry about risk.