Under a consumption-based theory of the pricing of risky assets, uncertain returns on such an asset should be discounted by a "stochastic discount factor" that takes into account:
a. the mean and standard deviation of the uncertain return
b. whether the uncertain return has a normal distribution.
c. both the nominal and real interest rates.
d. the rate of time preference and present and future marginal utility of wealth.
d
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Jerome has a "C" average in his philosophy course and a "B" average in his economics course. He decides to study an extra hour for his philosophy exam. This is an example of
A) ceteris paribus. B) caveat emptor. C) using assumptions to simplify. D) thinking at the margin.
Which of the following events will increase the quantity demanded of bottled water?
A) a fall in the price of bottled water B) a rise in the price of bottled water C) a rise in the price of a fitness club membership D) a fall in the price of soda E) an increase in the number of buyers of bottled water