Assume an Investor with the Following Utility Function: U =

question 33

Multiple Choice

Assume an investor with the following utility function: U = E(r) - 3/2(s²) . To maximize her expected utility, she would choose the asset with an expected rate of return of _______ and a standard deviation of ________, respectively.

• A)12%; 20%
• B)10%; 15%
• C)10%; 10%
• D)8%; 10%

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Definitions:

Standard Costs

Predetermined costs assigned to goods and services, used in setting a budget and analyzing performance.

Actual Costs

The actual expenses incurred in the production of goods or services, as opposed to estimated or standard costs.

Time Variance

This refers to the difference between the expected time to complete a task and the actual time taken.

Actual Direct Labor Hours

The real number of labor hours spent by workers directly involved in the production of goods or services.