IFoA CM2 Practice Questions - IFoA CM2 Financial Engineering And Loss Reserving Exam

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An investor prefers more to less and is risk-averse. Which form of stochastic dominance is the WEAKEST condition guaranteeing that all such investors prefer investment X to investment Y?

First-order stochastic dominance Second-order stochastic dominance Third-order stochastic dominance Mean-variance dominance

Correct Answer:

Second-order stochastic dominance

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