Look at the Utility Function Graphed Below and Select the Type

question 75

Multiple Choice

Look at the utility function graphed below and select the type of decision maker that corresponds to the graph.

• A) Risk averter
• B) Risk neutral
• C) Risk taker
• D) Risk player

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Definitions:

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project, calculated by discounting future cash flows to their present value and subtracting the initial investment.

IRR

Internal Rate of Return; a metric used in capital budgeting to estimate the profitability of potential investments.

MIRR

Modified Internal Rate of Return, a measure used in capital budgeting to estimate the profitability of potential investments.

NPV

Net Present Value, a calculation used to determine the present value of an investment's cash inflows and outflows over time.