Which of the Following Investors Would Mostly Prefer Conservative Investments

question 126

Multiple Choice

Which of the following investors would mostly prefer conservative investments with less risk to speculative investments with higher risks?

• A) A 25-year-old single investor with no children with a job that pays $60,000 per year
• B) An unemployed single parent who just received a $300,000 divorce settlement
• C) A 30-year-old who in independently wealthy and has a separate trust fund for day-to-day expenses
• D) A dual-career couple in their 30s with secure jobs whose combined income is $95,000
• E) A healthy 45-year-old who plans to work in his secure job for at least 25 more years

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Definitions:

Inferior Good

A type of good whose demand decreases when consumer income rises, unlike normal goods, which have a positive correlation with income.

Normal Good

A type of good for which demand increases as the income of the consumer increases, showing a positive relationship between income and demand.

Demand Function

A mathematical formula that describes the relationship between the quantity of a good or service demanded and its price, along with other factors like income and the prices of related goods.

Substitution Effect

The effect observed when consumers replace more expensive items with cheaper alternatives due to changes in relative price levels, affecting demand for goods.