Question
Background information: Investors A, B, C, D and E have each one portfolio. Investor A's portfolio have from the day it was created increased in
Background information:
Investors A, B, C, D and E have each one portfolio. Investor A's portfolio have from the day it was created increased in market value from 1 million dollars to 2 million dollars. Investor B's portfolio have increased from 1 million dollars to 1.7 million dollars. Investor C's portfolio have increased from 1 million dollars to 1.9 million dollars. Investor D's portfolio have increased from 1 million dollars to 4 million dollars. Investor E's portfolio have decreased from 1 million dollars to 0.8 million dollars million dollars.
This week have however been highly volatile and Investor A's portfolio have decreased to 1.9 million dollars, investor B's portfolio have increased to 1.8 million dollars, investor C's portfolio have increased to 1.92 million dollars, investor D's portfolio is unchanged and investor E's portfolio have increased to it's initial value 1 million dollars.
Which of the investors are according to the prospect theory happiest (have the highest utility) today (Friday 19.00) and who have the highest utility according to the conventional theory of utility?
Select one:
a. Investor E according to the prospect theory and investor D according to the conventional theory of utility
b. Investor D according to the prospect theory and investor A according to the conventional theory of utility
c. Investor C according to the prospect theory and investor D according to the conventional theory of utility
d. Investor D according to the prospect theory and investor E according to the conventional theory of utility
e. Investor B according to the prospect theory and investor D according to the conventional theory of utility
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started