If You Are Indifferent Between $1 and a Lottery Ticket

question 38

Multiple Choice

If you are indifferent between $1 and a lottery ticket that gives you a 0.001 chance of winning $1,000 you are:

• A) risk neutral.
• B) risk averse.
• C) risk elastic.
• D) a risk seeker.

---

Definitions:

Investment Account

A financial account held by an investment dealer that a client uses to keep and trade investment securities.

Equity Method

An accounting technique used to record investments in associate companies where the investor has significant influence but not full control.

Investor's Share

The portion of profits or losses attributed to an investor, based on their ownership percentage in an investment.

Other-Than-Temporary

A classification for a decline in the value of an investment or asset when the loss is not expected to be recovered in the short term, often requiring the asset to be written down to its reduced value permanently.