Refer to the Information Provided in Table 14 -Refer to Table 14

question 169

Multiple Choice

Refer to the information provided in Table 14.5 below to answer the question that follows.
Table 14.5
B's Strategy
$$\begin{array} { l l l l } \hline & & \text { Advertise } & \text { Don't Advertise } \\\hline & & \text { A's profit } \$ 200 & \text { A's profit } \$ 400 \\& & \text { million } & \text { million } \\& & \text { B's profit } \$ 200 & \text { B's profit } \$ 100 \\ & \text { Advertise } & \text { million } & \text { million } \\\text { A's Strategy } & & & \\& & \text { A's profit } \$ 100 & \text { A's profit } \$ 150 \\& \text { Don't } & \text { million } & \text { million } \\& & \text { B'sprofit } \$ 400 & \text { B's profit } \$ 150 \\& \text { Advertise } & \text { million } & \text { million }\end{array}$$
-Refer to Table 14.5. What is the Nash equilibrium in the game?

• A) (Advertise, Advertise)
• B) (Don't Advertise, Don't Advertise)
• C) (Don't Advertise, Advertise)
• D) (Advertise, Don't Advertise)

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Definitions:

Characteristic Line

In finance, a line that describes the relationship between the return on an investment and the return on the market as a whole, used in the Capital Asset Pricing Model.

Systematic Risk

Systemic risk associated with the overall market or a particular segment of the market, widely known as market risk, remains even after diversification efforts.

Unsystematic Risk

The risk of price change due to the unique circumstances of a specific security, as opposed to the overall market.

Security Market Line

A representation in financial market theory plotting the expected return of an asset or a portfolio against its risk (beta), under the Capital Asset Pricing Model.