If an Individual Is Risk Averse, Then

question 60

Multiple Choice

If an individual is risk averse, then:

• A)any allocation of risk is optimal.
• B)that person will always consume in a corner.
• C)that person will want to buy insurance at any price.
• D)that person may at times accept a bet.

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Definitions:

Operating Lease

A leasing agreement that allows for the use of an asset but does not convey rights of ownership, often treated as an operational expense rather than a capital expense.

Lease Liability

An obligation representing the present value of future lease payments under a leasing agreement.

Present Value

The current valuation of a future sum or ongoing cash flows, given a specified rate of interest.

Sales-type Lease

A lease agreement where the lessor recognizes immediate profits on the sale of an asset while retaining its ownership.