The Key Assumption That Accompanies the Use of Numbers for Measuring

question 14

Multiple Choice

The key assumption that accompanies the use of numbers for measuring utility is that:

• A) utility cannot be measured by an outside party.
• B) utility can be perfectly measured.
• C) individuals choose based on their preferences.
• D) people make consumption decisions.

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Definitions:

Target-date Funds

Mutual funds that automatically adjust their asset mix towards more conservative investments as the target date (usually retirement) approaches.

Asset Allocation

The process of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash, to optimize risk and reward based on an individual's goals and risk tolerance.

Hedge Funds

Investment funds that deploy a variety of strategies to earn returns on their capital, often engaging in more complex and higher-risk trades than traditional mutual funds.

Financial Planners

Professionals who assist individuals in managing their finances through investment, tax guidance, and personal budgeting advice.