If Capital Is Equal to 150,000 and Investment Is Equal

question 17

Multiple Choice

If capital is equal to 150,000 and investment is equal to 12,000,then this is a steady state if depreciation is at a rate of

• A) 8 percent.
• B) 12 percent.
• C) 15 percent.
• D) 3 percent.
• E) 4 percent.

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Definitions:

Systematic Risk

The danger that affects the whole market or a specific market segment, referred to as market risk, is unremovable by diversifying investments.

Business-Specific Risk

Refers to the uncertainties faced by a company due to the industry it operates in or the nature of its business operations.

Security Market Line

A representation in financial markets that shows the relationship between risk (as measured by beta) and the expected return of a portfolio or individual security.

Stock Market Equilibrium

A situation where the supply of stocks for sale is equal to the demand, and hence the market price is stable.