A Risk-Averse Person Has

question 51

Multiple Choice

A risk-averse person has

• A)a utility function whose slope gets flatter as wealth rises.This means they have increasing marginal utility of wealth.
• B)a utility function whose slope gets flatter as wealth rises.This means they have diminishing marginal utility of wealth.
• C)a utility function whose slope gets steeper as wealth rises.This means they have increasing marginal utility of wealth.
• D)a utility function whose slope gets steeper as wealth rises.This means they have diminishing utility of wealth.

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Definitions:

Portfolio Assets

All the individual investments held within a portfolio, including stocks, bonds, cash, and other securities.

Monthly Excess Returns

The return on an investment minus the return on a risk-free investment (such as Treasury bills), measured on a monthly basis.

S&P 500 Index

A stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.

Equity Hedge Funds

Funds that engage primarily in trading equities and equity derivative instruments, often employing strategies to hedge against market volatility.