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Author Question: A risk-averse investor will decide whether or not to invest by determining if the expected value of ... (Read 48 times)

kfurse

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on: Jul 1, 2018
A risk-averse investor will decide whether or not to invest by determining if the expected value of the investment if positive.
 
  Indicate whether the statement is true or false

Question 2

Kourtney invested 100 in a project that has a 20 chance of being worth 200 and a 75 chance of being worth 80. One can conclude that Michelle is
 
  A) not risk averse.
  B) risk neutral.
  C) risk loving.
  D) extremely poor.
Microeconomics ¦ Perloff ¦ 8th Edition
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babybsemail

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Reply #1 on: Jul 1, 2018
Answer to Question 1

False. A risk-averse investor will examine the expected utility from investing. If the expected utility from investing is larger than the expected utility from not investing the investment will be made.

Answer to Question 2

A


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