Suppose an investor with state-independent tastes is offered the choice between investment A and investment B. Investment A offers profit of $2,000 with probability 0.4, $4,000 with probability 0.2 and $6,000 with probability 0.4. Investment B offers profit of $2,000 with probability of 0.5 and $6,000 with probability 0.5. If the investor is risk averse, he will choose investment A.
Answer the following statement true (T) or false (F)
True
Rationale: The two investments have the same expected profit (of $4,000), but investment B has more risk.
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Disposable income is defined to be:
A. total income minustaxes. B. total income plus taxes. C. total income minus depreciation. D. All of these are true.
In the United States from 1981 to 2015, deaths from all of the following declined substantially except
A) cancer. B) kidney disease. C) heart attacks. D) strokes.
To calculate the internal rate of return on a factory that would yield a perpetual future stream of income, one would divide
A) the annual future payment by the cost of the factory. B) the sum of the future payments by the cost of the factory. C) the cost of the factory by the rate of interest. D) the cost of the factory by the annual future payment.