The expected value of an investment:
A. cannot be determined in advance.
B. is what the owner will receive when the investment is sold
C. is the probability-weighted sum of the possible outcomes.
D. is the sum of the payoffs.
Answer: C
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Which of the following economic activities is ignored in GDP accounts?
A) The market value of medical services B) The market value of educational services C) The market value of illegal drugs D) The market value of prescription drugs E) The market value of the services associated with used-car dealers
Property and casualty insurance companies tend to invest heavily in municipal bonds because
A) the bonds have higher yields than corporate bonds. B) property and casualty insurance companies are required by regulators to hold at least 20 percent of their assets in the form of municipal bonds. C) the bonds are tax-exempt. D) they hold large state and local government pension funds, thus requiring them to hold an equal amount of municipal bonds.
Other things the same, a government regulation that prevents using a current technology raises the price level.
a. true b. false
Banking panics are especially dangerous because:
A. they can lead to other panics, such as retail panics. B. the government will respond by seizing all banking assets. C. they can start easily and spread quickly. D. the banking sector employs about 25% of workers in the United States.