An individual faces two alternatives for an investment. Asset 'A' has the following probability of return schedule:Probability of returnReturn (Yield) %.2515.0.2012.0.2010.0.159.0.107.5.100.0Asset 'B' has a certain return of 10.25%. If this individual selects asset 'A' does it imply she is risk averse? Explain.
What will be an ideal response?
Since both assets provide the same expected return, they would be equally attractive to an investor who is risk neutral. An investor who is risk averse would prefer Asset B, which provides the same expected return but with less risk than Asset A.
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Most mutual funds are
A) no-load funds. B) load funds. C) large-load funds. D) small-load funds.
More than 50% of the elderly receive private pensions
Indicate whether the statement is true or false
Wealth creating transactions are less likely to occur
a. Without private property rights b. Without contract enforcement c. Both a and b d. None of the above
Sam has no job but keeps applying to get a job with a business that is unionized. He is qualified and he finds the pay attractive, but the firm is not hiring. Sam is
a. structurally unemployed. Structural unemployment exists even in the long run. b. structurally unemployed. Structural unemployment does not exist in the long run. c. frictionally unemployed. Frictional unemployment exists even in the long run. d. frictionally unemployed. Frictional unemployment does not exist in the long run.