A Risk-Averse Person

question 130

Multiple Choice

A risk-averse person

• A)would necessarily not play a game where she had a 50 percent chance of winning $1 and a 50 percent chance of losing $1.
• B)would necessarily not play a game where she had a 75 percent chance of winning $1 and a 25 percent chance of losing $1.
• C)Both A and B.
• D)Neither A nor B.

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Definitions:

Foreign-Currency Exchange

The trading of one currency for another, determining how much one country's currency is worth in another country's currency.

Real Interest Rate

The rate of interest an investor, saver, or lender receives (or expects to receive) after allowing for inflation.

Domestic Investment

The total amount of money invested within a country’s borders by both the private and public sectors.

Net Capital Outflow

In economic terms, it's the net flow of capital, both monetary and physical, out of a country, taking into account investments abroad minus foreign investments domestically.