Which of the Following Statements Is Incorrect

question 26

Multiple Choice

Which of the following statements is incorrect?

• A)A risk-averse decision maker will choose the alternative with the lowest variance among alternatives with identical expected utilities.
• B)A risk-neutral decision maker will always choose the alternative with the lowest variance among alternatives with identical expected utilities.
• C)A risk-loving decision maker will choose the alternative with the highest variance among alternatives with identical expected utilities.
• D)The expected utility of a lottery is the expected value of the utility levels that the decision maker receives from the payoffs in the lottery.

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Definitions:

Sales Account

An account in the general ledger that records the revenue generated from goods and services sold by a company during a specific period.

Defective

Pertaining to a product or component that has a flaw or imperfection that prevents it from functioning as intended.

Operating Cycle

The time period it takes for a company to purchase inventory, sell it, and convert the sale into cash.

Merchandising Company

A company that purchases and sells tangible inventory to customers without changing its form.