Mean variance utility defines risk using certainty equivalent wealth. The lower the certainty equivalent wealth, the lower the mean variance utility. uestion Select one: O True O False
Mean variance utility defines risk using certainty equivalent wealth. The lower the certainty equivalent wealth, the lower the mean variance utility.
uestion
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O True
O False
Under constant relative risk aversion, the lower the certainty equivalent wealth is than the average wealth of a lottery the riskier the lottery.
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O False
Given a
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Greater risk aversion means a plot of utility vs. wealth would look less
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O True
O False
The greater the wealth, the less the utility of the next dollar of wealth.
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O True
O False
People don't like risk because it means they get poorer when they're poorer and richer when they're rich. In fact, a financial security that does the opposite of that would be negatively risky and be even better than risk free.
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O False
People don't like risk because it is uncertain. Certain things are always preferable to uncertain things.
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O False
Given the opportunity to buy a 50% at $2 for $1, most people would be indifferent
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O False
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