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Author Question: What is meant by risk neutrality? What will be an ideal ... (Read 152 times)

altibaby

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on: Jun 29, 2018
What is meant by risk neutrality?
 
  What will be an ideal response?

Question 2

Refer to Figure 3-2. A decrease in productivity would be represented by a movement from
 
  A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.


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Benayers

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A person who is risk-neutral is indifferent to a fair bet; that is a bet that has zero expected value. They are neither risk-averse nor risk-seeking. People who are risk neutral do not care about risk and care just about expected value.

Answer to Question 2

D


altibaby

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Reply #2 on: Jun 29, 2018
Thank you


Benayers

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Reply #3 on: Jun 29, 2018
No problemo


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