A manager in an investment center is offered a potential investment that would have an ROA of 15 percent. After the investment, it would make up 20 percent of his total portfolio. Currently, he makes 20 percent on his portfolio, though the company requires only 12 percent. Which of the following is true?
A. He will not make the investment because the company prefers 12 percent.
B. He will make the investment because a larger portfolio is always better than a smaller portfolio.
C. He will not make the investment because it lowers his overall return to 19 percent.
D. He will make the investment since it is 3 percent greater than the company's required return.
Answer: C
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Your textbook uses supply and demand curves together to illustrate
A) the level of output needed by individuals. B) the level of output needed by society. C) how economists are necessary to make markets to work effectively. D) how market prices play a key role in coordinating the plans of sellers and buyers. E) all of the above.
The chain-weighted output index method of measuring real GDP is based on
A) using current prices rather than base year prices. B) averaging the market value of the expenditures over a two year period and then comparing with a base period. C) using the prices of two adjacent years to calculate the growth rate of real GDP. D) averaging the nominal and real measures of GDP to come up with a more accurate figure.
The Phillips curve:
a. is downward sloping. b. is upward sloping. c. shows there is a tradeoff between unemployment and the inflation rate. d. shows there is a tradeoff between population and the inflation rate.
The relationship between the overall price level in the economy and total production by firms is shown in the:
A. inflation rate. B. aggregate supply curve. C. business cycle. D. aggregate demand curve.