Nina has a convex utility of wealth function, u(x). She is contemplating two prospects, L and M, where L is a mean preserving spread of M. Which of the following statements is therefore true? a. Nina will prefer M to L.
b. Nina will prefer L to M.
c. Ninaâs ranking of L and M cannot be determined without more information.
d. Nina must be risk averse, but that is the most one can say.

b. Nina will prefer L to M.

Explanation:

Convex utility of wealth indicates that an individual tends to be comfortable with taking risks.

A concave utility function shows an aversion for risk.

A mean preserving spread occurs when one variable has greater variance than another but they both have the same mean.

In the given scenario prospect L will have a greater variance than prospect M since it is a mean preserving spread.

Given Nina's risk taking preference she will most likely take prospect L that offers more variability over prospect M

c

explanation:

c because the item on a bank statement is also referred to as an account statement. in addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder's account number, and the bank's customer service number

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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