Speculation Across States of Nature Will Be Profitable If One

question 3

Multiple Choice

Speculation across states of nature will be profitable if one:

• A)buys low and sells lower.
• B)buys high and sells low.
• C)sells high after buying higher.
• D)buys low and sells high.
• E)avoids risk by selling short.

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Definitions:

Consumption

Families engaging in the use of products and services.

Income

Sums of money attained, usually on a fixed schedule, from work or investment undertakings.

Interest Rate

The proportion at which principal loaned money is repaid with interest to the lender over time, usually as an annual rate.

Utility Function

A mathematical representation that ranks individuals' or entities' preferences over a set of goods or outcomes.