The Continuity Assumption States That

question 18

Multiple Choice

The continuity assumption states that:

• A)given any prospect, there is a riskless outcome that can be replaced by another without changing the expected utility from the prospect.
• B)if two prospects involve the same outcomes, a probability, e^*, exists that makes an individual indifferent between the prospects.
• C)there is a probability that allows a risky prospect to be substituted for a riskless prospect in an individual's preference ordering.
• D)given any prospect, an equivalent prospect can be created by substituting a prospect that is equivalent to a particular outcome.

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Definitions:

Separate Office Staff

A designated group of employees who work in a distinct physical or administrative division within an organization.

Decentralization

The distribution of decision-making authority from central to local units or levels in an organization.

Separate Sales Forces

This refers to the practice of having distinct teams within a business that focus on selling different products, services, or targeting different markets.

Income From Operations

The earnings generated from a company's regular business activities, excluding any investment income or expenses unrelated to its core operations.