MrOBKandle Has a Utility Function C₁c₂, Where C₁ Is

question 14

Multiple Choice

Mr.O.B.Kandle has a utility function c₁c₂, where c₁ is his consumption in period 1 and c₂ is his consumption in period 2.He has no income in period 2.If he had an income of $40,000 in period 1 and the interest rate increased from 10 to 12%,

• A)his consumption in both periods would increase.
• B)his savings would increase by 2% and his consumption in period 2 would also increase.
• C)his consumption in both periods would decrease.
• D)his savings would not change but his consumption in period 2 would increase by 400.
• E)his consumption in period 1 would decrease by 12% and his consumption in period 2 would also decrease.

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Definitions:

Arithmetic Average Return

The simple mean of a series of returns over a specific period, often used to gauge the performance of an investment.

Statistically Significant

Refers to a result that is not likely to occur randomly or by chance, but rather is likely to be attributable to a specific cause.

Portfolio Performance

The analysis and evaluation of the returns generated by a collection of investments held by an individual or an institution.

Observation Period

A specific timeframe during which data is collected or observations are made.