Speculative bubbles may occur in the shares market ?

A. during periods of extreme pessimism because so many stocks become undervalued
B. only when people are irrational
C. when stocks are fairly valued
D. because rational people may buy an overvalued share if they think they can sell it to someone for even more at a later date

Share prices will follow a random walk if ?

A. shares are overvalued
B. people behave irrationally when choosing shares
C. markets reflect all available information in a rational way
D. shares are undervalued

If people are risk averse, then ?

A. None of these answers are true
B. All of these answers are true
C. They dislike bad things more than the like comparable good things
D. The utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet
Their utility function exhibit the property of diminishing marginal utility of wealth

Which of the following is an example of moral hazard ?

A. After Gull buys fire insurance, he begins to smoke cigarettes in bed.
B. None of these answers demonstrate moral hazard
C. Mahmood has been feeling poorly lately so he seeks health insurance
D. All of these answers demonstrate moral hazard

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