For a Risk Averse Person, the Marginal Utility of Wealth

question 158

Multiple Choice

For a risk averse person, the marginal utility of wealth

• A) decreases as wealth increases.
• B) increases as wealth increases.
• C) decreases as wealth decreases.
• D) remains constant as wealth increases.

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Definitions:

Pay Back

The process of returning or repaying borrowed funds, especially the principle amount of a loan.

Accounting Break-Even

The point at which total costs and total revenues are exactly equal, resulting in neither profit nor loss.

Net Income

The net income of a company once all costs and taxes are subtracted from its revenues.

Internal Rate

Internal rate, likely referring to the internal rate of return (IRR), is a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value (NPV) of all cash flows equal to zero.