Someone Who Is Risk-Averse Has

question 107

Multiple Choice

Someone who is risk-averse has

• A)diminishing marginal utility of wealth.
• B)constant marginal utility of wealth.
• C)increasing marginal utility of wealth.
• D)less marginal utility of wealth than someone who is risk-neutral.

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Definitions:

General Reserve

Funds set aside out of profits for the future protection of the business and to strengthen its financial position.

Retained Earnings

The portion of a company's profits not distributed to shareholders but instead reinvested in the business or kept as reserve.

Partial Goodwill Method

An accounting approach where goodwill is calculated only for the portion of a subsidiary owned by the parent company.