Increased Uncertainty Resulting from the Subprime Crisis ________ the Required

question 21

Multiple Choice

Increased uncertainty resulting from the subprime crisis ________ the required return on investment in equity.

• A)raised
• B)lowered
• C)had no impact on
• D)decreased

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Definitions:

Status Quo

The existing state of affairs; in prospect theory, the current situation from which gains and losses are calculated.

Utility

A measure of satisfaction or value that consumers receive from consuming goods and services.

Endowment Effect

The tendency people have to place higher valuations on items they possess (are endowed with) than on identical items that they do not possess; perhaps caused by loss aversion.

Behavioral Economists

Economists who study how psychological, social, cognitive, and emotional factors affect the economic decisions of individuals and institutions.