(Table: Choice with Uncertainty) Look at the Table Choice with Uncertainty.Suppose

question 101

Multiple Choice

(Table: Choice with Uncertainty) Look at the table Choice with Uncertainty.Suppose the probability that the sitcom does not make it to television is 30%, that it makes it to television but is not the most viewed show in its time slot is 50%, and that it makes it to television and is the most viewed show in its time slot is 20%.Given this information, Norman, as a utility maximizer:

• A)should keep his teaching job.
• B)should quit his teaching job and go to Hollywood.
• C)will be indifferent between leaving and staying, because his expected income is the same whether he stays a teacher or moves to Hollywood.
• D)will be indifferent between leaving and staying, because his expected total utility is the same whether he stays a teacher or moves to Hollywood.

---

Definitions:

T-bill

Short-term government securities that mature in a year or less, offering investors a safe and liquid means of investment.

Capital Allocation Line

A line on a graph that represents the risk-return trade-off of investments, showing the rates of return for efficient portfolios depending on the risk-free rate and the market risk.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points from their mean, used in finance to gauge the volatility of investment returns.

Expected Rate

The anticipated return on an investment, taking into account various factors like market trends, risk level, and past performance.