Figure 9-3. The figure shows a utility function for Rob.

-Refer to Figure 9-3. From the appearance of Rob's utility function, we know that
A) if Rob owns a house, then he definitely would buy fire insurance provided the cost of the insurance were reasonable.
B) Rob 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) Rob is risk averse.
D) Rob is not risk averse.

Question

Figure 9-3. The figure shows a utility function for Rob.
 
-Refer to Figure 9-3. From the appearance of Rob's utility function, we know that
A) if Rob owns a house, then he definitely would buy fire insurance provided the cost of the insurance were reasonable. 
B) Rob 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) Rob is risk averse. 
D) Rob is not risk averse.

Quizplus · Accepted Answer

The Answer of Figure 9-3. The figure shows a utility function for Rob.
 
-Refer to Figure 9-3. From the appearance of Rob's utility function, we know that
A) if Rob owns a house, then he definitely would buy fire insurance provided the cost of the insurance were reasonable. 
B) Rob 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) Rob is risk averse. 
D) Rob is not risk averse.