Evidence That People Do Not Always Make Choices That Reflect

question 33

Multiple Choice

Evidence that people do not always make choices that reflect sensible preferences include

• A) Choice reversals
• B) Conformance to the principle of revealed preference
• C) Conformance to the Ranking Principle
• D) All of these

---

Definitions:

Expected Return

The weighted average of all possible returns for a given investment, with weights being the probabilities of each outcome.

Risk-Free Rate

The hypothetical return rate on an investment that carries no risk of losing money, commonly illustrated by the interest rate on government securities.

Multifactor Model

A financial model that employs multiple factors in its calculations to explain market phenomena and/or equilibrium asset prices.