According to the Nonsatiation Assumption in the Markowitz Theory, Investors

question 28

Multiple Choice

According to the nonsatiation assumption in the Markowitz theory, investors always prefer portfolios with the higher levels of terminal wealth because

• A) they allow the investor to spend more on future consumption
• B) the investor will choose the portfolio with the smaller risk
• C) diminishing marginal utility makes them risk averse
• D) they allow investors to save more in the present period

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Definitions:

Marginal Revenue

The additional revenue that a company receives from selling one more unit of a good or service.

Output Effect

The impact on total production and revenue when a firm alters the quantity of output produced, holding other factors constant.

Monopolist's Profit

The excess earnings a monopolist achieves due to the lack of competition, allowing for pricing above marginal cost.

Maximize Profit

The process or strategy of adjusting the production and sales operations of a company to generate the highest possible return or profit.