Jessica Must Choose Option a or Option B

question 193

Multiple Choice

Jessica must choose option A or option B. Option A gives her $10,000 for sure. Option B gives her $5,000 if a fair coin toss shows heads and $15,000 if it shows tails. If Jessica is risk averse her utility of wealth curve becomes

• A) flatter as her wealth increases and she will choose option A.
• B) flatter as her wealth increases and she will choose option B.
• C) steeper as her wealth increases and she will choose option A.
• D) steeper as her wealth increases and she will choose option B.

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Definitions:

Rate Variance

The difference between an expected rate and the actual rate charged, often analyzed in budgeting and performance evaluation.

Communicating Management

The process of conveying strategic decisions and policies from management to lower-level employees and stakeholders to ensure alignment and understanding.

Effective Means

Methods or strategies that achieve desired results or objectives efficiently.

Budget

An estimate of income and expenditure for a set period of time, guiding financial planning and performance evaluation.