Diversification puts "the law of large numbers" to work for you because it
A) eliminates all asset risk.
B) reduces tax liabilities on earned dividends.
C) increases the chance that a single bond will substantially improve the overall performance of your portfolio.
D) lowers the chance that a reduction in the market value of a single asset like a corporate stock will significantly reduce your overall portfolio return.
D) lowers the chance that a reduction in the market value of a single asset like a corporate stock will significantly reduce your overall portfolio return.
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Suppose a firm's technology is represented by the Cobb-Douglas production function F(L, K) = 5LK. The wage rate is $50 and the rental rate of capital is $10. What is the least-cost combination to produce 100 units of output?
What will be an ideal response?
As the slope of the aggregate supply curve increases, this indicates that
A. the economy is getting close to potential GDP. B. the economy is reducing employment. C. inflation will be less of a problem. D. output is falling.
The problem with the separation of ownership from control is that
A. the managers of the firm can make decisions that reduce the wealth of the owners while not reducing their own wealth. B. the managing partner of a firm may not always behave in the way that other managers would if they were the managing partners. C. the owners of firms may not always know the best way to run a firm, yet they are the ones who elect the managers of the firm. D. the owner in a proprietorship may not always act in the profit-maximizing fashion because he or she may not have the experience or expertise that professional managers have.
Which of the following can make the unemployment rate rise?
A. A decrease in the number of people with jobs. B. A decrease in the number of people neither working nor looking for work. C. An increase in the number of people who are looking for work. D. An increase in the number of people who are looking for work and a decrease in the number of people with jobs.