Sara Owns a Ring

question 45

Multiple Choice

Sara owns a ring. She asks Tomas, a jeweler, to add a diamond to it. Adding the diamond will increase the value of the ring. This is

• A)accession.
• B)acquisition.
• C)conversion.
• D)validation.

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Definitions:

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods or levels of happiness.

Risk Neutral

A condition or attitude where an individual or entity is indifferent to risk when making investment or economic decisions, focusing solely on potential outcomes without regard to the associated risks.

Insurance

A financial product that provides compensation or coverage against losses or damages, based on the principle of risk pooling and premiums paid by the insured parties.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1 where 1 indicates certainty.