An individual is risk neutral if her utility curve for wealth is:
A) linear.
B) concave.
C) convex.
D) decreasing.
E) horizontal.

Question

Quizplus · Accepted Answer

A risk-neutral individual's utility curve for wealth is linear, indicating that their satisfaction increases at a constant rate with each additional unit of wealth. This means they are indifferent to risk, valuing risky and safe options equally if they have the same expected outcome.

An Individual Is Risk Neutral If Her Utility Curve for Wealth