A risk-averse investor versus a risk-neutral investor:
A. will take the same risks as the risk neutral investor if the expected returns are equal.
B. needs greater compensation for the same risk versus the risk neutral investor.
C. will never take a risk, while the risk neutral investor will.
D. needs less compensation for the same risk versus the risk neutral investor.
Answer: B
You might also like to view...
If a product has an inelastic demand, then:
a. there is probably a long time period under consideration. b. as price increases, total revenue to producers decreases. c. an increase in the price will decrease total consumer expenditures. d. there are probably many complements for the good. e. there are probably few substitutes for the good.
If a tax is imposed on a market with inelastic supply and elastic demand, then
a. buyers will bear most of the burden of the tax. b. sellers will bear most of the burden of the tax. c. the burden of the tax will be shared equally between buyers and sellers. d. it is impossible to determine how the burden of the tax will be shared.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A. increases. B. initially increases, then decreases. C. decreases. D. remains constant.
There are 500 families in a neighborhood that are affected by air pollution from a local factory. The pollution is within legal limits, but could be reduced further if the company spent $10,000 on upgraded ventilators. The company agrees to install the ventilators if the affected families contribute the $10,000. A committee starts to collect donations to pay for the ventilators. Which of the following is most likely to occur?
A. Even if the families raise $10,000, the firm will not reduce its air pollution since it is within legal limits. B. Because each individual contribution is so small and individuals will benefit from the reduction in air pollution whether they contribute or not, most people will not contribute and the firm will not upgrade the ventilators. C. Because there are relatively few families involved and the individual contribution is so small, all families will voluntarily contribute. D. The courts will force the firm to spend the $10,000 regardless of whether or not the families contribute the money.