Suppose That Romeo Has the Utility Function U = S

question 6

Multiple Choice

Suppose that Romeo has the utility function U = S ⁵_RS ²_J and Juliet has the utility function U = S ²_RS ⁵_J, where S_R is Romeo's spaghetti consumption and S_J is Juliet's.They have 42 units of spaghetti to divide between them.

• A)Romeo would want to give Juliet some spaghetti if he had more than 21 units of spaghetti.
• B)Romeo would want to give Juliet some spaghetti if he has more than 26 units of spaghetti.
• C)Juliet would want to give Romeo some spaghetti if she has more than 28 units.
• D)Romeo and Juliet would never disagree about how to divide the spaghetti.
• E)Juliet would want to give Romeo some spaghetti if she has more than 30 units of spaghetti.

---

Definitions:

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically featuring fixed terms, including interest payments and future repayment of principal.

Preferred Stocks

Shares of stock that have priority over common stock in terms of dividend payments and assets in the event of a liquidation.

Corporate Bonds

Debt securities issued by corporations to finance operations, acquisitions, or other capital requirements, which obligate the issuer to pay interest and repay the principal at maturity.