Author Question: Suppose an investor equally allocates their wealth between a risk-free asset and a risky asset. If ... (Read 170 times)

big1devin

  • Hero Member
  • *****
  • Posts: 583
Suppose an investor equally allocates their wealth between a risk-free asset and a risky asset. If the MRS of the current allocation is less than the slope of the budget line, then the investor should:
 
  A) shift more of their wealth to the risky asset.
  B) shift more of their wealth to the risk-free asset.
  C) keep the same asset allocation.
  D) We do not have enough information to answer this question.

Question 2

Good A is a Giffen good. If the price of good A were to suddenly double, the income effect would cause the purchases of good A to increase by
 
  A) more than double.
  B) exactly double.
  C) less than double.
  D) Any of the above are possible.
  E) none of the above



jlaineee

  • Sr. Member
  • ****
  • Posts: 380
Answer to Question 1

A

Answer to Question 2

D



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

Barbituric acid, the base material of barbiturates, was first synthesized in 1863 by Adolph von Bayer. His company later went on to synthesize aspirin for the first time, and Bayer aspirin is still a popular brand today.

Did you know?

Oliver Wendell Holmes is credited with introducing the words "anesthesia" and "anesthetic" into the English language in 1846.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

Did you know?

Patients who have been on total parenteral nutrition for more than a few days may need to have foods gradually reintroduced to give the digestive tract time to start working again.

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

For a complete list of videos, visit our video library