You Are Thinking of Adding One of Two Investments to an Already

question 18

Multiple Choice

You are thinking of adding one of two investments to an already well-diversified portfolio. If you are a risk-averse investor

• A)security A is the better choice
• B)security B is the better choice
• C)either security would be acceptable
• D)cannot be determined with information given

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Definitions:

Marginal Benefits

The incremental satisfaction or benefit a consumer derives from consuming an additional unit of a good or service.

Net Benefits

The total benefits of a decision or project after subtracting all the costs associated with it.

Total Cost

The complete cost of producing a good or service, combining both fixed and variable expenses.

Total Benefit

The sum of all the positive effects or satisfaction received by consuming a product or service.