A) the pleasure of winning $1,000 on a bet exceeds the pain of losing $1,000 on a bet.
B) the pain of losing $1,000 on a bet exceeds the pleasure of winning $1,000 on a bet.
C) the utility function exhibits the property of increasing marginal utility.
D) the utility function gets steeper as wealth increases.
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A) She would not play games where the probability of winning and losing a dollar are the same.
B) She might not buy health insurance if she thinks her risks are low.
C) Her marginal utility of wealth decreases as her income increases.
D) All of the above are correct.
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A) Al
B) Ralph
C) Stan
D) They all retire with the same amount.
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A) A person adds risky stock to his portfolio.
B) A person who has narrowly avoided many accidents applies for automobile insurance.
C) A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10.
D) A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.
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A) A company that produces many different products decides to produce fewer.
B) After selling stock, corporate management spends funds on projects with greater risks than shareholders had anticipated.
C) Instead of holding only the stocks of companies engaged in the banking business, a person decides to hold stock in a number of different companies producing different goods and services.
D) A person decides to purchase only stocks that have paid high dividends in the past.
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A) option A.
B) option B.
C) option C.
D) either option A or option B because Will is indifferent between those two options and they are superior to option C.
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A) After a person obtains life insurance, she takes up skydiving.
B) A person obtains insurance knowing he is in poor health.
C) A person holds stock only in very risky corporations.
D) A person holds stocks from only a few corporations.
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A) the pain that Alex would experience if he lost $500 of his wealth would exceed the pleasure that he would experience if he added $500 to his wealth.
B) the pleasure that Alex would experience if he added $500 to his wealth would exceed the pain that he would experience if he lost $500 of his wealth.
C) the property of increasing utility does not apply to Alex.
D) the property of diminishing marginal utility does not apply to Alex.
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A) that all stocks are fairly valued all the time and that no stock is a better buy than any other.
B) that all stocks are fairly valued all the time, but that some stocks may be better buys than other.
C) that some stocks may be better buys than others and stock experts can determine which ones.
D) that no stock is efficiently valued.
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A) risk increases at an increasing rate.
B) risk increases at a decreasing rate.
C) risk decreases at an increasing rate.
D) risk decreases at a decreasing rate.
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A) the risk of the portfolio increases, as indicated by the increasing value of the standard deviation of the portfolio.
B) the risk of the portfolio increases, as indicated by the decreasing value of the standard deviation of the portfolio.
C) the risk of the portfolio decreases, as indicated by the increasing value of the standard deviation of the portfolio.
D) the risk of the portfolio decreases, as indicated by the decreasing value of the standard deviation of the portfolio.
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A) It is relatively easy to reduce firm-specific risk by increasing the number of companies one holds stock in.
B) Stock prices, even if not exactly a random walk, are very close to it.
C) Some people have made a lot of money in the stock market by using insider information, but these cases are not contrary to the efficient markets hypothesis.
D) All of Chloe's conclusions are correct.
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A) a decrease in the cost of expanding and a decrease in the interest rate.
B) a decrease in the cost of expanding and an increase in the interest rate.
C) an increase in the cost of expanding and a decrease in the interest rate.
D) an increase in the cost of expanding and an increase in the interest rate.
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A) index funds should typically beat managed funds, and usually do.
B) index fund should typically beat managed funds, but usually do not.
C) mutual funds should typically beat index funds, and usually do.
D) mutual funds should typically beat index funds, but usually do not.
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A) the interest rate rises and the time until the payment is made increases.
B) the interest rate rises and the time until the payment is made decreases.
C) the interest rate falls and the time until the payment is made increases.
D) the interest rate falls and the time until the payment is made decreases.
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The utility Dave receives from...View Answer
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