Risk premium is always a negative number

Assignment Help Business Economics

Reference no: EM131388868

True/False

a) The risk premium is equal to expected gamble minus the certainty equivalent.

b) In the Principal-agent framework, the principal can observe the effort exerted by the agent.

c) Risk premium is always a negative number.

d) The expected utility from a gamble is always smaller than the utility received from getting the amount of the expected return for certain.

Reference no: EM131388868

Questions Cloud

Experiencing an explosive population growth : If the interest rate is 6% per year compounded quarterly, how long (number of quarters) does it take earn $100 interest on an initial deposit of $300? Downtown is experiencing an explosive population growth of 18% annually. At the end 2002, the popul..

Affect wages in related non-unionized occupations : Explain how a union might cause an increase in employment in the unionized occupation. Also, explain how this might, in this case, affect wages in related non-unionized occupations.

Investors in which two countries accounted : Investors in which two countries accounted for about 25 percent of all foreign purchases of U.S. stocks and bonds in? 2012? A decrease in the price level results in? a(n) ________ in the quantity of real GDP demanded because a lower price level? ____..

Disruptive to labor markets than the minimum wage : Proponents of a basic income (or negative income tax) argue that it is a superior method of addressing income inequality than the minimum wage. First, briefly explain in what sense the basic income is less disruptive to labor markets than the minimum..

Risk premium is always a negative number : The risk premium is equal to expected gamble minus the certainty equivalent. In the Principal-agent framework, the principal can observe the effort exerted by the agent. Risk premium is always a negative number.

Net exports are to changes in interest rates : Why will there be less crowding out of private spending by government spending the less sensitive consumption, investment, and net exports are to changes in interest rates?

Price elasticity of demand at the equilibrium price-quantity : Consider the market for laptop computers. The demand for laptops is Q = 1800 – 3P. Suppose the supply of laptops is given by Q = –200 +2P. What is the equilibrium price of laptops? What is the price elasticity of demand at the equilibrium price and q..

Two alternative options are equally profitable for the robot : Suppose that you are bargaining against a robot that is programmed to choose a strategy that maximizes its own profit against rational opponents. If two alternative options are equally profitable for the robot, it will toss a fair coin to decide what..

When the federal government borrows money : If one state is suffering from acid rain as a result of sulfur dioxide emissions from the industries in a neighboring state, then: When the federal government borrows money, the resulting ______ in interest rates will lead private investment to _____..

User Account

All Pages