Figure 27-2. The figure shows a utility function for Britney.
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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. 
-
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 of Figure 27-2. The figure shows a utility function for Britney. 
-
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.