Which of the Following Games Might a Risk-Averse Person Play

question 104

Multiple Choice

Which of the following games might a risk-averse person play?

• A)a game where she has a 50 percent chance of winning $1 and a 50 percent chance of losing $1
• B)a game where she has a 50 percent chance of winning $100 and a 50 percent chance of losing $100
• C)a game where she has a 60 percent chance of winning $1 and a 40 percent chance of losing $1
• D)a game where she has a 40 percent chance of winning $1 and a 60 percent chance of losing $1

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Definitions:

Short-Term Basis

A period or timeframe that typically covers the near future, often less than a year, used for planning and decision making.

Banks

Financial institutions that accept deposits from the public, create credit, and provide loans, among other financial services.

Lender Of Last Resort

The role typically assumed by a central bank to provide funds to financial institutions in distress, to prevent systemic failures.

Federal Reserve System

The central banking system of the United States, responsible for monetary policy, regulation of banks, and stability of the financial system.