The variation in the rate of return one can expect from ownership of stocks will generally be smaller
A) if a diverse set of stocks is held over a lengthy period of time, such as 30 or 40 years.
B) if all of the funds are invested in a specific sector of the economy such as health care.
C) if all of the funds are invested in a single stock.
D) if the funds are invested for a relatively short period of time.
A) if a diverse set of stocks is held over a lengthy period of time, such as 30 or 40 years.
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In most business situations where firms compete, often they can escape the prisoner's dilemma and reach the most profitable outcome. Which of the following is a reason for this?
A) Most games are repeated games and firms can employ retaliation strategies against those who do not cooperate. B) Most games are one-shot games so firms learn from their mistakes. C) Firms are constantly improving their products and anticipating changing consumer tastes. D) Firms engage in aggressive advertising to overcome the barriers to loyalty.
If there is a shortage in a free market, then
A) consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level. B) consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level. C) suppliers will decrease their output to match demand. D) suppliers will accept any price below equilibrium.
Marginal revenue product of labor equals marginal product times the wage only when the firm is a perfect competitor in the product market
a. True b. False
Risk is shifted to the owners of a firm. In return they receive
A) normal wages. B) residual income. C) normal profit. D) marginal profit.