Given That Tamar Is a Risk-Averse Person,she Might Accept a Bet

question 55

Multiple Choice

Given that Tamar is a risk-averse person,she might accept a bet with a 50 percent chance of losing $100 today if she had a 50 percent

• A)chance of winning $120 in two years and the interest rate was 11%.
• B)chance of winning $114 in two years and the interest rate was 7%.
• C)chance of winning $110 in two years and the interest rate was 3%.
• D)None of the above are correct;a risk averse person would not accept any of the above bets.

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Definitions:

Expected Useful Life

It refers to the estimated duration a fixed asset is expected to be economically useful to the owner, beyond which it is considered to depreciate.

Amortized

The process of spreading the cost of an intangible asset over its useful life, or the reduction of debt through regular payments of principal and interest over a set period.

Accumulated Amortization

The total amount of amortization expense that has been applied to intangible assets over time, reducing their book value on the balance sheet.

Intangible Assets

Assets that lack physical substance but have economic value due to rights, privileges, or advantages they confer to the business, such as patents, trademarks, and copyrights.