QUESTION 17

One explanation that behavioral economists give for procrastination and other time-inconsistent behavior is

1. people's personal discount rate is greater in the far future than in the near future.
2. people's personal discount rate is smaller in the far future than in the near future
3. .people's personal discount rate is the same in the far future as in the near future.
4. None of these

QUESTION 18

If two events are perfectly positively correlated, then

1. diversification does not reduce risk at all.
2. diversification is not necessary since there is no risk.
3. diversification eliminates all risk.
4. diversification only cuts the risk in half.

QUESTION 24

In using the Internal Rate of Return approach, one must first calculate the discount rate on the investment that makes

1. the net present value equal zero.
2. the interest rate equal zero.
3. the interest rate equal the discount rate.
4. the first year's return positive.

QUESTION 27

Amy received her wage based on her working hours in the grocery store. The work contract she signed is an example of a

1. fixed-fee contract.
2. hire contract.
3. contingent contract.
4. sharing contract.