Which of the following investment strategies involves generating a higher expected rate of return through increasing risk?
A. Diversifying
B. Leverage
C. Hedging risk
D. Value at risk
Answer: B
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When the U.S. price level decreases, we would expect a:
A. movement down along the aggregate demand curve. B. shift straight up of the aggregate demand curve. C. shift to the right of the aggregate demand curve. D. movement up along the aggregate supply curve.
When a night watchman only performs two walk-throughs per night when he is being paid to perform five walk-throughs per night, it is an example of
a. both moral hazard and adverse selection. b. neither moral hazard nor adverse selection. c. moral hazard, but not adverse selection. d. adverse selection, but not moral hazard.
Which of the following is an example of U.S. foreign portfolio investment?
a. Albert, a German citizen, buys stock in a U.S. computer company. b. Larry, a citizen of Ireland, opens a fish and chips restaurant in the United States. c. Nancy, a U.S. citizen, buys bonds issued by a Japanese bank. d. Dustin, a U.S. citizen, opens a country-western tavern in New Zealand.
Suppose that in most car collisions between cars of unequal size, the smaller car sustains the most damage and its occupants suffer the most injury. In answering the following question, assume that, on average, smaller cars generate less air pollution than larger cars and that every person in the economy drives at least one car. As the average size of cars increases, an individual's incentive to buy a smaller car:
A. increases in order to prevent injury to others. B. decreases because of the increased risk of injury in a collision. C. remains the same because car purchases depend on individual preferences. D. increases to offset the external cost of air pollution.