The Utility Function of a Risk-Averse Person Has a

question 29

Multiple Choice

The utility function of a risk-averse person has a

• A)positive slope and gets steeper as wealth increases.
• B)positive slope but gets flatter as wealth increases.
• C)negative slope but gets steeper as wealth increases.
• D)negative slope and gets flatter as wealth increases.

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Definitions:

Controlling Investor

An individual or entity that holds a significant portion of a company's shares or voting rights, granting them substantial influence or control over the company's decisions and policies.

Investee

A company in which an investor holds a minor equity or debt stake, implying a level of influence but not full control.

Fair Value

An estimate of the market value of an asset or liability, based on the current price to sell an asset or settle a liability in an orderly transaction.

Controlling Influence

The power or authority to govern or direct the management and policies of another entity without necessarily having majority ownership.