Managers with Higher Levels of Risk Propensity Are More Likely

question 78

Multiple Choice

Managers with higher levels of risk propensity are more likely than their conservative counterparts to:

• A) adhere to the rational model and be extremely cautious about their decisions.
• B) avoid mistakes and infrequently make decisions that lead to big losses.
• C) rely heavily on intuition and gamble big investments on their decisions.
• D) reach decisions slowly after a great amount of analysis.
• E) display no aggression in decision making.

---

Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period.

Put Option

This contract permits a person to have the option, without being compelled, to sell a certain amount of a base asset at a fixed price within a designated timeframe.

Call Delta

Measures the sensitivity of an option's price to a change in the price of the underlying asset, reflecting how much the price of the option is expected to change for a small change in the asset price.