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7-2 Homework Assignment

Module Seven Homework Questions

 

  1. (P8-43) Jason Scott (see Problem 8-42) has decided to incorporate utility theory into his decision with his mortgage application. The following table describes Jason’s utility function:

 

Monetary ValueUtility
-$48000.00
-$29000.10
-$24000.12
-$10000.15
-$5000.19
$00.21
$19000.26
$24000.30
$48001.00

 

(a) How can you best describe Jason’s attitude toward risk? Justify your answer.

 

(b) Will the use of utilities affect Jason’s original decision in Problem 8-42?

 

Last Updated on February 11, 2019

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