Assume that there are two investments very similar in all respects, but Investment X has a higher rate of return than does Investment Y. As a result of the arbitrage process, the price of Investment
A. X will fall and its rate of return will fall
B. Y will rise and its rate of return will fall
C. X will fall and its rate of return will rise
D. Y will fall and its rate of return will rise
D. Y will fall and its rate of return will rise
You might also like to view...
Expansionary monetary policy is likely to lead to a depreciation of the nation's currency
Indicate whether the statement is true or false
In the Keynesian cross diagram, an increase in autonomous consumer expenditure causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________,
everything else held constant. A) up; rise B) up; fall C) down; rise D) down; fall
The combined effect on the loanable funds market of a new technology that increases the marginal physical product of capital and a shift in consumers' preferences for more present consumption is
a. an increase in the interest rate b. a decrease in the interest rate c. unclear because each of the effects has an opposite influence on the interest rate d. an increase in the quantity of loanable funds demanded and supplied on the market e. a decrease in the quantity of loanable funds demanded and supplied on the market
Which statement is true?
A. Externalities and public goods are basic classes of market failure. B. Externalities, but not public goods, is a basic class of market failure. C. Public goods, but not externalities, is a basic class of market failure. D. Neither public goods nor externalities are basic classes of market failure.