5 Questions
According to Merton Miller and Franco Modigliani, rational investors always prefer more wealth to less and are indifferent as to whether a given increment to their wealth takes the form of cash payments or an increase in the market value of their holdings of shares.
Rational investors prefer cash payments over an increase in the market value of their holdings of shares.
How do financial economists use the term 'rational' when describing investors?
As a synonym for 'normal-smart'
What is a starting point for a description of the rational investors of standard finance?
Being immune to all cognitive and emotional errors
How do people commonly use the term 'rational' in relation to investors?
As a synonym for 'normal-smart'
How do financial economists define 'rational' investors?
Investors who always prefer more wealth to less and are indifferent to the form of wealth increase
Test your knowledge on rationality and investing with this quiz! Explore the concept of rationality in financial decision-making and challenge common perceptions of "normal" investors.
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