A primary financial market is:
A. one in which newly issued securities are sold.
B. a market only for AAA rated Securities.
C. a market just for corporate stocks.
D. the New York Stock Exchange.
Answer: A
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Assume there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes this situation?
A) The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease. B) Some consumers will be unable to obtain hybrid automobiles at the market price and will have an incentive to offer to buy the product at a higher price. C) The supply of hybrid automobiles is greater than the demand for hybrid automobiles. D) The surplus will cause an increase in the equilibrium price of hybrid automobiles.
The cross-price elasticity of demand for coffee and caskets is likely to be
A) less than zero. B) greater than zero. C) zero. D) infinity.
Compute the expected return, standard deviation, and value at risk for each of the following investments:Investment (A): Pays $800 three-fourths of the time and a $1,200 loss otherwise.Investment (B): Pays $1,000 loss half of the time and a $1,600 gain otherwise.State which investment will be preferred by each of the following investors, and explain why.(i) a risk-neutral investor(ii) an investor who seeks to avoid the worst-case scenario.(iii) a risk-averse investor.
What will be an ideal response?
If we think back to Chapter 11 when we discussed moral hazard, discuss how a government ceding the right to control the amount of currency to a central bank is a way to treat a potential moral hazard problem.
What will be an ideal response?