Which of the Following Statements Is Incorrect

question 26

Multiple Choice

Which of the following statements is incorrect?

• A)A risk-averse decision maker will choose the alternative with the lowest variance among alternatives with identical expected utilities.
• B)A risk-neutral decision maker will always choose the alternative with the lowest variance among alternatives with identical expected utilities.
• C)A risk-loving decision maker will choose the alternative with the highest variance among alternatives with identical expected utilities.
• D)The expected utility of a lottery is the expected value of the utility levels that the decision maker receives from the payoffs in the lottery.

---

Definitions:

Owner's Capital

The amount of equity a business owner has invested in the firm or the net worth attributable to them, reflecting their financial stake.

Owner's Drawings

Owner's drawings refer to the withdrawal of cash or other assets from a business by the owner(s) for personal use, affecting the owner's equity account.

Chronological Order

The arrangement of events, dates, or actions in the order that they occurred or will occur, from earliest to latest.

Journal Entry

A record in accounting that represents a transaction and its effect on various accounts, used to transfer sums from one account to another.