In Utility Theory,a(n)__________________ Decision Maker Is an Individual Who Will

question 3

Multiple Choice

In utility theory,a(n) __________________ decision maker is an individual who will choose the decision alternative having the highest expected profit.

• A) high-risk
• B) low-risk
• C) risk-neutral
• D) posterior

---

Definitions:

Discount Factor

A multiplier used in discounted cash flow analysis to calculate the present value of future cash flows, reflecting the time value of money.

Discount Rate

The interest rate used to discount future cash flows to their present value, often in the context of evaluating investments or loan decisions.

Net Present Value

A calculation used to assess the profitability of an investment, considering the present value of its cash flows and initial cost.

Discount Rate

In discounted cash flow analysis, the discount rate is the interest rate utilized to ascertain the present value of future cash flows.