If Ann's Utility Function Is U = W⁰

question 11

Multiple Choice

If Ann's utility function is U = W⁰.⁵,and she invests in a business which can yield $6,400 with probability 1/5,and $3600 with probability 4/5,then her expected wealth is

• A) $1280.
• B) $2880.
• C) $4160.
• D) $5840.

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Definitions:

Impact-Investment Fund

A fund invested with the intention to create positive, measurable social and environmental impact alongside a financial return.

Social Venture Capitalist (SVC)

An investor who provides financial capital to start-up companies or small businesses with the intention of generating both social impact and financial returns.

Impact Investment

Investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.

Enterprising Nonprofits

A form of social entrepreneurship where both the venture mission and the market impact are for social purposes.