Cannot be determined from the information given.
Here, the investor is risk-neutral.
A=0
Thus, U = E(r).
We have the requisite information to answer the question, hence option E is eliminated.
Investment Mean Return Std Dev U
1 0.12 0.3 0.12
2 0.15 0.5 0.15
3 0.21 0.16 0.21
4 0.24 0.21 0.24
Thus, it can be seen that investment 4 given the maximum utility, and is thus the selected investment for a risk neutral investor. Thus, option D.
What options does a risk-averse individual select?
- When someone is considering different investment options, they are said to have a risk-neutral mentality.
- One is considered to be risk neutral if they just consider possible profits, regardless of the danger.
- To assess profit without considering risk may look like a dangerous behavior by nature.
Learn more about risk-neutral person
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<u>The complete question is - </u>
Use the below information to answer the following question Investment WN - Expected Return E() 0.12 0.15 0.21 0.24 Standard Deviation 0.3 0.5 0.16 0.21 U= E(r)-(A/2)s2 Which investment would you select if you were risk neutral? A. 1 B.2 C. 3 D. 4 E. Cannot be determined from the information given. If you are risk neutral, your only concern is with return, not risk.
Answer: Option (b) is correct.
Explanation:
Economics of scale occurs when a firm's long run average total costs decreases as there are more number of units produced.
Basically, economics of scale is a cost advantage that is experienced by the firms or companies by increasing the level of production.
This is happened because of the indirect relationship between the per unit fixed cost and output level. The larger the output produced results in lower per unit fixed cost.
There are two types of economies of scale that are internal and external economies of scale.
Answer:
nondurable and consumer goods
Explanation:
Nondurable goods are affected by scarcity because their time life is limited. For example, if the capital goods required for its transportation or conservation of ice cream broke down, the product would ruin very easily.
Consumer goods are generally mass consumed. For example clothes are consumed by most of us during the year, but most of them are imported nowadays. Any trade barrier that delayed their supply would cause a rapid shortage.
