Which of the Following Best Defines Household Finance

question 14

Multiple Choice

Which of the following best defines household finance?

• A)The study of how a household and the people in it develop the cash flows necessary to support operations and provide for the well-being of its members.
• B)The study of how much it costs to purchase a home.
• C)The study of how a household and the people in it can minimize the risk of bankruptcy.
• D)The study of how the number of people in a household can be maximized.
• E)The study of how a household and the people in it limit expenditures and maximize cash inflows.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, also known as market risk, which cannot be eliminated through diversification.

Characteristic Line

A line generated in a graphical representation of the returns on a security versus the returns on the market, used to assess risk.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.

Variance

A statistical measurement of the dispersion between numbers in a data set, measuring how far each number in the set is from the mean.