Figure 27-4. The figure shows a utility function for Alex.
-Refer to Figure 27-4. If most people's utility functions look like Alex's utility function, then it is easy to explain
Why
A) people buy various types of insurance.
B) we observe a trade-off between risk and return.
C) most people prefer to hold diversified portfolios of assets to undiversified portfolios of assets.
D) None of the above are correct.

Question

Figure 27-4. The figure shows a utility function for Alex. 
-Refer to Figure 27-4. If most people's utility functions look like Alex's utility function, then it is easy to explain
Why
A) people buy various types of insurance. 
B) we observe a trade-off between risk and return. 
C) most people prefer to hold diversified portfolios of assets to undiversified portfolios of assets. 
D) None of the above are correct.

Quizplus · Accepted Answer

The Answer of Figure 27-4. The figure shows a utility function for Alex. 
-Refer to Figure 27-4. If most people's utility functions look like Alex's utility function, then it is easy to explain
Why
A) people buy various types of insurance. 
B) we observe a trade-off between risk and return. 
C) most people prefer to hold diversified portfolios of assets to undiversified portfolios of assets. 
D) None of the above are correct.