Consider the Following to Answer the Question(s) Below

question 16

Multiple Choice

Consider the following to answer the question(s) below:
A landowner is considering a community development project. Even though he realizes that the current market for housing is not very favourable, he believes that there will be an influx of retirees into the area within the next five years. He is trying to decide between two alternatives: (1) building detached homes in a planned retirement community or (2) building a smaller townhouse/condominium complex. Mortgage interest rates will affect his outcomes and the applicable payoff (in $ millions) table is shown below.
-If the landowner is risk averse he would choose the action with the lowest Coefficient of Variation (CV) . Which of the following is true?

• A) The CV is lower for building townhouses and condominiums.
• B) The CV is lower for building detached homes in a planned retirement community.
• C) Even if the landowner is risk averse, the CV leads to the same choice as the expected value approach.
• D) The CV is higher for building townhouses and condominiums, and even if the landowner is risk averse, the CV leads to the same choice as the expected value approach.
• E) The CV is lower for building detached homes in a planned retirement community, and even if the landowner is risk averse, the CV leads to the same choice as the expected value approach.

---

Definitions:

Intelligence Quotient

A score that takes into account a student’s mental and chronological age.

Mental Age

Mental age refers to a measure of an individual's cognitive ability compared to the average cognitive ability of a person at a specific age.

Chronological Age

The amount of time that has elapsed since an individual's birth, typically measured in years, months, and days.

Mental Age

A measure of an individual's mental aptitude based on the average abilities of a certain age group.