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konstantin123 [22]
3 years ago
5

Nina has a convex utility of wealth function, u(x). She is contemplating two prospects, L and M, where L is a mean preserving sp

read of M. Which of the following statements is therefore true?
a. Nina will prefer M to L.
b. Nina will prefer L to M.
c. Ninaâs ranking of L and M cannot be determined without more information.
d. Nina must be risk averse, but that is the most one can say.
Business
1 answer:
Lerok [7]3 years ago
6 0

Answer:

b. Nina will prefer L to M.

Explanation:

Convex utility of wealth indicates that an individual tends to be comfortable with taking risks.

A concave utility function shows an aversion for risk.

A mean preserving spread occurs when one variable has greater variance than another but they both have the same mean.

In the given scenario prospect L will have a greater variance than prospect M since it is a mean preserving spread.

Given Nina's risk taking preference she will most likely take prospect L that offers more variability over prospect M

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Companies A and B each have the same level of total assets, the same tax rate, and the same earnings before interest and taxes (
anygoal [31]

Answer:

a.Company A has a lower return on assets (ROA).

c.Company A has a lower times interest earned (TIE) ratio.

That is options a and c

Explanation:

For company A to have high debt ratio means it has a higher debt which will reduce earnings. Company A's earnings will be less than Company B's.

ROA= Net income/Total assets

Since Company A's income is less than Company B's ROA for Company A will be less than that for Company B.

TIE = Earnings before Interest and Tax/Interest

Due to higher debt of company A it's interest will be higher resulting in low TIE.

5 0
3 years ago
Why might Joel want a shorter auto loan term?
Mashutka [201]
The total cost of the lone will be lower
6 0
3 years ago
At the heart of any marketing program is the firm's ________, its tangible offering to the market A. value B. strategy C. produc
Lelechka [254]

Answer: (C) Product

Explanation:

  A marketing program is one of the type of business strategy in which the various types of activities are get performed for achieving the main objective of the business in an organization.

It is basically consist of the various types of plans, strategies and the activities in which the product of the company is promoted in the market.

The marketing programs plays an important in the business as it helps in establishing the good relationship with the customers where the products are offered in the market.

Therefore, the firm product is known as the heart of the marketing program that are tangible offer in the market.        

6 0
3 years ago
If a small company invests its annual profits of $150,000 in a stock fund which earns 18% per year, the amount in the fund after
kenny6666 [7]

Answer:

the amount in the fund after 10 years will be $785,075.04

Explanation:

The computation of the amount after 10 years is shown below"

As we know that

Future value  = Present value × (1 + rate of interest)^number of years

= $150,000 × (1 + 0.18)10

= $785,075.04

Hence, the amount in the fund after 10 years will be $785,075.04

5 0
3 years ago
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Vinil7 [7]

Talents are abilities that people are either born with or can improve upon.

In this case flying a plane and having good grades are great talents.

Orlando cannot improve his eyesight by just trying harder. Having long legs is a natural attribute, but not a talent.

4 0
3 years ago
Read 2 more answers
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