John,
Money is of no object only if you have a lot of it. Many people out there can't afford a $200 combat knife. I limited it to $40, because it seems like a reasonable number. Also, you could get a cheap handgun (maybe even a used one) for around $100. There are a lot of good choices of knives available for around $40, which are not just emergency knives. Some of them have even been battle tested - e.g. MKI and MKII.
I think the sheath is important, because having an open bladed knife is not exactly safe. Personally, I keep my knives sharp enough to slice right through cardboard - so an improvised cardboard sheath wouldn't be of much use.
If I absolutely had no other choice - like I was running away from a stalking attacker and I needed a knife now - a kitchen knife would work. But often, they are not balanced well, have poor grips, and are generally not well suited for use in self defense.
Overall, I'm looking for a knife that you can keep next to your bed, in the car (where legal) or even can carry on your person when called for. Guns are great - but once you're out of ammo, they're not too useful. A $40 knife is meant to supplement a defensive handgun or shotgun - or replace it where not available.
Of course I'd prefer a wonderful custom knife meant just for me, but not all of us can afford that luxury. It's not as if a $40 knife won't do the job.
-- Rob
