Elasticity Measures

question 204

Multiple Choice

Elasticity measures

• A)whether a price increase causes quantity demanded to increase or decrease
• B)the strength of an economy's tendency to recover from recession
• C)the responsiveness of decision makers to changes in prices, income, or other variables
• D)the profitability of investment in an industry
• E)the long-run flexibility of prices in the economy

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Definitions:

Convergence Play

An investment strategy that exploits the price difference between two or more markets or securities with the expectation that their prices will eventually converge.

Statistical Arbitrage

A quantitative approach to trading that uses statistical models to identify price inefficiencies among securities for profit.

S&P 500 Future

A financial contract based on the future value of the S&P 500 stock market index.

Statistical Arbitrage

A quantitative approach to equity trading involving complex statistical models to identify price inefficiencies between pairs of securities.