Figure 27-2.The figure shows a utility function for Britney.
-Refer to Figure 27-2.From the appearance of the utility function,we know that
A)if Britney owns a house,she would not consider buying fire insurance.
B)Britney would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 2 percent to a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent.
C)Britney would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent to a portfolio of stocks with an average return of 6 percent and a standard deviation of 3 percent.
D)All of the above are correct.

Question

Figure 27-2.The figure shows a utility function for Britney. 
-Refer to Figure 27-2.From the appearance of the utility function,we know that
A)if Britney owns a house,she would not consider buying fire insurance. 
B)Britney would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 2 percent to a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent. 
C)Britney would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent to a portfolio of stocks with an average return of 6 percent and a standard deviation of 3 percent. 
D)All of the above are correct.

Quizplus · Accepted Answer

The Answer is B