Your utility function is given by U = M2. You are
A)risk averse.
B)risk neutral.
C)a risk seeker.
D)at is impossible to say.

Question

Quizplus · Accepted Answer

The utility function U = M2 indicates that the individual has a concave (downward sloping) utility function, which means that they are a risk seeker. This is because the marginal utility of money increases at a decreasing rate, meaning that the individual will prefer a higher expected value of wealth even if there is higher risk or uncertainty involved. Therefore, the best choice would be to take on greater risk for the potential of higher returns.

Your Utility Function Is Given by U = M2