AAFM CWM_LEVEL_2 Exam - Topic 2 Question 51 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 51
Topic #: 2

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 __________.

AConcave 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

BConvex 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

CS-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

DS-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

Show Suggested Answer

Suggested Answer: A

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

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Velda

6 months ago

I thought it was the other way around for a sec!

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Evette

6 months ago

Yup, losses matter more in prospect theory!

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Marvel

6 months ago

Wait, are we sure about that? Sounds a bit off to me.

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Jose

6 months ago

Totally agree, and prospect theory is definitely s-shaped.

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Hubert

6 months ago

Conventional theory is all about concave utility functions!

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Erick

7 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

7 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

7 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

7 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

7 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

7 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

7 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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