Applying the Idea of Time Inconsistency,we Can Say That,in General,a

question 35

Multiple Choice

Applying the idea of time inconsistency,we can say that,in general,a person's "future-oriented self":

• A) has the same objectives as the person's present-oriented self, but articulates them differently.
• B) tends to choose healthier options, whereas the present-oriented self gives into temptation more easily.
• C) is less rational in decision-making, because that self rarely matches actual behavior.
• D) is more rational in decision-making, because its choices are generally healthier or more altruistic.

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Definitions:

Beta

A benchmark for the changeability, or structural risk, found in a security or an assemblage of investments measured against the overall market.

Portfolio Variance

A measure used in finance to quantify the volatility from the mean return of a portfolio, indicating the spread of its returns.

Cyclical Stock

A stock whose price is affected by macroeconomic changes in the overall economy and tends to rise and fall with the business cycle.

Countercyclical Stock

A stock whose performance is inversely related to the economy's performance, typically doing well during economic downturns.