This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Briefly describe the equity premium paradox of investments. What will be an ideal ... (Read 44 times)

mrsjacobs44

  • Hero Member
  • *****
  • Posts: 500
on: Jun 20, 2018
Briefly describe the equity premium paradox of investments.
 
  What will be an ideal response?

Question 2

Define procedural invariance.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

phuda

  • Sr. Member
  • ****
  • Posts: 348
Reply #1 on: Jun 20, 2018
Answer to Question 1

Answer: In order to maximize gains, an investor should put his/her capital into the stock market which is relatively volatile but profitable. However, many investors choose to invest in low variability-low payoff investments like bonds. Research evidence suggests that loss aversion is why people avoid the more volatile stock market.

Answer to Question 2

Answer: Procedural invariance refers to asking the same question in two ways. For instance, people can indicate their preferences by answering Which of these two gambles would you prefer to play? Another way to ask the same question is How much would you be willing to pay to have an opportunity to play each of these gambles? It is assumed that if you would be willing to choose a particular gamble that you would also be willing to pay more for that gamble as well.


mrsjacobs44

  • Member
  • Posts: 500
Reply 2 on: Jun 20, 2018
Wow, this really help

Zebsrer

  • Member
  • Posts: 284
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

The calories found in one piece of cherry cheesecake could light a 60-watt light bulb for 1.5 hours.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Did you know?

Patients who have undergone chemotherapy for the treatment of cancer often complain of a lack of mental focus; memory loss; and a general diminution in abilities such as multitasking, attention span, and general mental agility.

Did you know?

To maintain good kidney function, you should drink at least 3 quarts of water daily. Water dilutes urine and helps prevent concentrations of salts and minerals that can lead to kidney stone formation. Chronic dehydration is a major contributor to the development of kidney stones.

Did you know?

More than one-third of adult Americans are obese. Diseases that kill the largest number of people annually, such as heart disease, cancer, diabetes, stroke, and hypertension, can be attributed to diet.

Four main models that describe the relationship between ecosystem function and biodiversity. Four main models that describe the relationship between ecosystem function and biodiversity.
Describe the development of atherosclerosis, including its role in the risk of heart disease Describe the development of atherosclerosis, including its role in the risk of heart disease
Describe the Conceptual Forecasting Framework in your own words. Describe the Conceptual Forecasting Framework in your own words.
Describe the Conceptual Forecasting Framework in your own words. Describe the Conceptual Forecasting Framework in your own words.
Philip wants to supplement his pension by $415 per month with income from his investments. His ... Philip wants to supplement his pension by $415 per month with income from his investments. His ...
The treasurer of a union proposes changing the method of compounding interest on premium ... The treasurer of a union proposes changing the method of compounding interest on premium ...
Video: Global warming and its effect on climate change

For a complete list of videos, visit our video library