An individual faces two alternatives for an investment: Asset A has the following probability return schedule:Probability of returnReturn (Yield) %.2511.0.2010.5.209.5.159.0.106.5.10-1.0Asset B has a certain return of 8.0%. If the individual selects asset A does she violate the principle of risk aversion? Explain.
What will be an ideal response?
Asset A provides an expected return of 8.65%. For the investor the 0.65% premium may be a large enough differential to compensate for the additional risk, so she may still be "risk averse".
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Which of the following takes place in the direct finance market?
A) Savers make funds available to borrowers by making deposits to savings accounts. B) Borrowers take out loans from banks. C) Loans to corporations are made from the sale of corporate bonds. D) Firms borrow funds from their retained earnings.
If businesses expect the economic activity to expand
A) the planned investment function relating investment to the interest rate will shift to the left. B) the planned investment function relating investment to the interest rate will remain unchanged, but will move downward along the curve. C) the planned investment function relating investment to the interest rate will steepen. D) the planned investment function relating investment to the interest rate will shift to the right.
The measure of income received by persons from all sources is known as
a. personal income. b. national income. c. gross domestic product. d. net national product.
All of the following are factors that will change demand and shift the demand curve, EXCEPT Question 20 options:
A. the price of the good itself. B. preferences. C. income. D. the prices of related goods.