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shepuryov [24]
4 years ago
15

The shape of your utility function implies that you are arisk-averse individual, and, therefore, youwould accept the wager becau

se the difference in utility between A and C isless than the difference between C and B. Which of the following best explain why the pain of losing $3,000 exceeds the pleasure of winning $3,000 for risk-averse people? Check all that apply. The more wealth that risk-averse people have, the less satisfaction they receive from an additional dollar. The more wealth that risk-averse people have, the more satisfaction they receive from an additional dollar. Risk-averse people overestimate the probability of losing money. The utility function of a risk-averse person exhibits the law of diminishing marginal utility.
Business
1 answer:
Furkat [3]4 years ago
8 0

<u>Solution and Explanation:</u>

As the utility function is concave in shape, so person is risk averse.  Thus, he will not accept the gamvle.

The difference between utility at point A&C = 70 minus 65 = $5, is less than a the difference between A&B = 65 minus 55 = $10

<u>MCQ: </u>

Answer is option a&d  - risk averse people fear a lot for losing money, thus they overestimate the probability of loss

Since, shape of utility function is concave, hence the double derivative of utility with respect to wealth is negative, so utility falls at an decreasing rate , as wealth increases

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Answer:

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4 0
4 years ago
Read 2 more answers
Blank occur when something is on the floor that shouldn't be
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5 0
4 years ago
Which management scholar matches your viewpoints on the role of management? Why? Provide support for your answer.
11111nata11111 [884]

Answer:

X&Y theory by Douglas McGregor

Explanation:

The X&Y theory of management assumes there are two different types of workers. Theory X workers lack ambition and drive and need to be ordered around by bosses to do anything. Theory Y workers, on the other hand, enjoy work and strive for self-fulfillment.

Both views of employees are a bit extreme, as most workers fall somewhere between X and Y. Employees don't need to be ordered to do every task, but there is some need for discipline and rules for most employees. Many employees do enjoy work, but it doesn't always come naturally and requires some encouragement at times. There should be a middle ground for implementing this theory.

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5 0
3 years ago
Assume the United States and European governments adopt a system of flexible exchange rates. If currency traders think the Europ
frutty [35]

Answer:

Euro would depreciate in value against the U.S. Dollar.

Explanation:

It can be said that if the European economy experiences a recession but not the U.S. then the most likely scenario would be that the Euro would depreciate in value against the U.S. Dollar. This means that the price of the Euro would decrease and a U.S. Dollar will be able to be exchanged for a greater quantity of European Euros.

3 0
3 years ago
Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following
VARVARA [1.3K]

Option b. 7.78% is the correct answer. The cost of equity from retained earnings is 7.78% as per the CAPM approach

The relationship between systematic risk, or the general dangers of investing, and expected return for assets, particularly stocks, is described by the Capital Asset Pricing Model (CAPM).

A linear relationship between the required return on investment and risk is established by this financial model.

Retained earnings refer to the total earnings that a company has generated from its operations minus the dividends distributed among shareholders. The retained earnings are earnings reinvested in the business.

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Cost of equity = 7.77% or 7.78%

Learn more about retained earnings:

brainly.com/question/14529006

#SPJ4

8 0
1 year ago
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