If Pearl Is a Risk Averse, Then

question 56

Multiple Choice

If Pearl is a risk averse, then

• A) expected utility has nothing to do with her choices.
• B) she does not have diminishing marginal utility of wealth.
• C) she will not buy insurance.
• D) risk is costly to her.

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Definitions:

EMH

Efficient Market Hypothesis, the theory that all available information is already reflected in stock prices, and it is impossible to consistently achieve higher returns.

Insider Information

Knowledge about a company's activities or financial condition that has not been made public and that can provide a financial advantage in the market.

Inefficient Market

A market in which asset prices do not always accurately reflect all available information, potentially allowing investors to earn abnormal returns.

Maurice Kendall

Maurice Kendall was a British statistician known for his significant contributions to the field of statistics, including work in time series analysis and the development of the Kendall rank correlation coefficient.