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AAFM CWM_LEVEL_2 Exam - Topic 2 Question 51 Discussion

Section C (4 Mark)The assumptions concerning the shape of utility functions of investors differ between conventional theory and prospect theory. Conventional theory assumes that utility functions are __________ whereas prospect theory assumes that utility functions are __________.
A) Concave and defined in terms of wealth; s-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth
B) Convex and defined loses relative to current wealth; s-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth
C) S-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth; concave and defined in terms of wealth
D) S-shaped (convex to losses and concave to gains) and defined in terms of wealth; concave and defined in terms of loses relative to current wealth

AAFM CWM_LEVEL_2 Exam - Topic 2 Question 51 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam
Question #: 51
Topic #: 2
[All CWM_LEVEL_2 Questions]

Section C (4 Mark)

The assumptions concerning the shape of utility functions of investors differ between conventional theory and prospect theory. Conventional theory assumes that utility functions are __________ whereas prospect theory assumes that utility functions are __________.

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Suggested Answer: A

by Lashaunda at Nov 16, 2022, 03:52 PM

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Velda
10 months ago
I thought it was the other way around for a sec!
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Evette
10 months ago
Yup, losses matter more in prospect theory!
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Marvel
11 months ago
Wait, are we sure about that? Sounds a bit off to me.
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Jose
11 months ago
Totally agree, and prospect theory is definitely s-shaped.
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Hubert
11 months ago
Conventional theory is all about concave utility functions!
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Erick
11 months ago
I’m confused between the options; I thought both theories dealt with wealth, but now I’m not so sure about the specifics of prospect theory.
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Orville
11 months ago
I practiced a question similar to this, and I feel like conventional theory focuses on wealth, while prospect theory emphasizes losses.
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Antonio
11 months ago
I think prospect theory has that s-shaped curve, but I can't recall if it's defined in terms of wealth or losses.
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Leatha
11 months ago
I remember that conventional theory is about concave utility functions, but I'm not entirely sure about the prospect theory part.
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Leota
11 months ago
Hmm, this looks like a tricky one. I'll need to carefully review the ILOM command options to determine the correct way to start the storage server.
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Berry
11 months ago
This looks like a straightforward SQL query to get a comma-separated list of employee names in alphabetical order for each department. I think option C is the correct answer.
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Peter
12 months ago
This question seems straightforward, I'm pretty confident I can identify the most accurate description of a DDoS attack.
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