Figure 27-4

question 1

Multiple Choice

Figure 27-4.The figure shows a utility function for Alex.
-Refer to Figure 27-4.From the appearance of Alex's utility function,we know that

• A)if Alex owns a house,then he definitely would buy fire insurance provided the cost of the insurance was reasonable.
• B)Alex would voluntarily exchange a portfolio of stocks with a high average return and a high level of risk for a portfolio with a low average return and a low level of risk.
• C)Alex is risk averse.
• D)Alex is not risk averse.

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Definitions:

High Potential

Referring to individuals or entities that exhibit the capacity for significant growth or achievement.

Need for Achievement

A psychological trait characterized by an individual's desire to achieve excellence and set challenging goals.

Adverse Situations

Circumstances or events that are unfavorable and pose challenges to an individual's or organization's goals and objectives.

Exert Influence

To apply or use power, authority, or influence to affect or sway someone or something's actions or decisions.