{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Afternoon Exam solutions

Afternoon Exam solutions - Module I Exam(Afternoon INSR...

This preview shows pages 1–3. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
- 1 - Part’ I:’ True’ or’ False .’ Justify . ’(3 5’ minutes) ’ Determine whether each of the following statements is true or false. Answers’ without’ justifications’ will’ not’ be’ graded.’Please’select’either’“True”’or’“False.” Question’1. ’ (5 minutes) The Value at Risk (VaR) is a bad measure of risk because it violates first-order stochastic dominance. False.’VaR’violates’ second-order stochastic dominance ,’not’first -order’stochastic’ dominance.’ Question’ 2.’ (5 minutes) The Ellsberg paradox shows that people often choose options that are not consistent with subjective expected utility. True.’The’following’two’types’of’justifications’are’equally’good. -’You’could’describe’the’result’in’the’context’the ’ experiment.’Subjective’expected’ utility’states’that’people’will’have’a’subjective’assessment’of’the’probabil ity’of’black’ and’yellow’balls,’and’choose’based’on’those’subjective’probabilities.’However,’no’ probability’is’consistent’with’people’choosing ’options ’I’and’IV.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern