Which of the Following Is an Advantage of the Certainty

question 85

Multiple Choice

Which of the following is an advantage of the certainty equivalent approach?

• A)It allows decision makers to recognize particularly risky years.
• B)It uses the cost of capital as the appropriate discount rate which is easier to calculate.
• C)It uses regression analysis which gives a certain estimate of cash flows.
• D)It uses computer simulation methods which makes a precise prediction of cash flows.

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Definitions:

Behaviorism

A psychological approach that emphasizes the study of observable behaviors and the external stimuli that lead to them, discounting the importance of internal mental states.

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Social Institutions

Established systems and structures within society that dictate certain patterns of behavior, such as family, religion, education, and government.