-The Above Figure Shows Bob's Utility Function

question 28

Multiple Choice

-The above figure shows Bob's utility function.He currently has $100 of wealth,but there is a 50% chance that it could all be stolen.Bob is

• A) risk averse.
• B) risk neutral.
• C) risk loving.
• D) risk premium.

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Definitions:

Magnitude

Refers to the size or extent of something, often used in the context of numbers, earthquakes, and vectors to denote their strength or value.

Hypotenuse

The longest side of a right-angled triangle, opposite the right angle, calculated with the Pythagorean theorem.

Inches

A unit of length in the British imperial and United States customary systems of measurement, equal to 1/12 of a foot.

Hypotenuse

The longest side of a right-angled triangle, opposite the right angle, calculated as the square root of the sum of the squares of the other two sides.