Which of the following statements is correct? a.Diversification is a useful method to reduce risk for a person who can divide up small amounts of a larger sum among a number of different choices. b.Flexibility is a useful method to reduce risk for a person who has to make all-or-nothing decisions by providing options to switch between choices as circumstances change over time. c.Real option arise in settings outside of financial markets. d.All of the above.

Risk involves uncertainty about the effects of an activity with respect to something which the…

Answered: choices. b. Flexibility is a useful…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following statements is correct?

	a.	Diversification is a useful method to reduce risk for a person who can divide up small amounts of a larger sum among a number of different choices.
	b.	Flexibility is a useful method to reduce risk for a person who has to make all-or-nothing decisions by providing options to switch between choices as circumstances change over time.
	c.	Real option arise in settings outside of financial markets.
	d.	All of the above.

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