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Evening exam solutions

Evening exam solutions - Module I Exam(Evening INSR 205/805...

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Module’I ’Exam ’(Evening) INSR’205/805 ,’ Spring’201 2,’Module’I ’ Professor’Daniel’Gottlieb ’ Rules:’ Do not begin the exam until instructed to do so. This is a closed-book, closed-notes exam. Calculators are allowed. You have 80 minutes to complete the exam. Please be courteous to other students if you leave the exam room early. You may not discuss this exam with anyone nor transmit information about this exam to anyone until everyone in the course has taken either this exam or a make-up exam. Doing so is a violation of University regulations. Instructions’and’Information ’ Anything written on the backside of pages will not be graded. There is extra space at the end of the exam if you run out of room in the space provided. Points are proportional to the number of minutes attributed to each question. On quantitative questions, you must show your work to get credit. If you think there is ambiguity in the assumptions of the question, state your assumptions clearly. On qualitative questions, your answers should be succinct yet complete. You will be evaluated on both the clarity and content of your answers. Answering with either bullet points or full sentences is fine. Points will be deducted for comments that are needlessly long or not relevant. On True or False questions, remember to justify each answer. Answers without justifications will not be graded. State clearly whether your answer is “True” or “False.” “It depends” is not a valid answer. Remember to answer all parts of all questions. Please’sign’this’after’you’have’finished’the’exam. I have not cheated on this exam. I will comply with University regulations in all matters related to this exam. Signature: Name: Section:
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- 1 - Part’ I:’ True’ or’ False .’ Justify . ’(3 5 ’minu tes)’ 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’
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