An investment opportunity is a sure thing; it will pay off $100 regardless of which of the three possible outcomes comes to pass. The variance of this investment opportunity:
A) is 0.
B) is 1.
C) is 2.
D) is -1.
E) cannot be determined without knowing the probabilities of each of the outcomes.
A
You might also like to view...
The De Beers Company, one of the longest-lived monopolies, is facing increasing competition. One source of competition comes from people who might resell their previously owned diamonds
Why is De Beers worried that people might resell their previously owned diamonds? A) because the availability of previously owned diamonds would make the market demand curve for diamonds more inelastic and force De Beers to lower its price B) because previously owned diamonds would be a close substitute to newly mined diamonds and therefore reduce De Beers' market power C) because the availability of previously owned diamonds would increase the market demand for diamonds and dilute De Beers' monopoly D) because De Beers will not be able to guarantee the quality of previously owned diamonds and fears that its reputation might be harmed
A few years ago, the city of Seattle, Washington, considered imposing a specific tax on all espresso-based coffee drinks sold in the city. The extra tax revenue generated would have been used to fund after-school programs for low-income children
The coffee-house owners (firms) agreed that this would be a good program to fund, but they argued that the tax would sharply reduce their sales volume and they would pay most of the tax burden. This claim is true if: A) the demand for espresso-based coffee is more inelastic than supply. B) the demand for espresso-based coffee is more elastic than supply. C) there are no close substitutes for espresso-based coffee drinks. D) espresso-based coffee drinks can be produced at constant marginal cost.
Use a model of the dollar-euro foreign exchange market to illustrate how the value of the dollar is determined in terms of the euro. Identify two factors that would increase the value of the dollar in terms of the euro.
What will be an ideal response?
The production possibilities curve illustrates which two of the following essential principles?
A. Economic growth and market failure. B. Factors of production and price signals. C. Market mechanisms and laissez faire. D. Scarce resources and opportunity cost.