Those Who Believe That the Overall Decline in the U

question 72

Multiple Choice

Those who believe that the overall decline in the U.S.savings rate is real generally explain it in terms of a

• A) long-term decline in income and wealth.
• B) generally upward trend in time preferences.
• C) gradual erosion of real estate values.
• D) shift in the age profile of the labor force.
• E) steady increase in consumption smoothing.

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Definitions:

Volatility

The rate at which the price of a security increases or decreases for a given set of returns.

Time Value

The idea that having money now is more valuable than having the same amount later on because of its ability to generate earnings over time.

Strike Price

The specified price at which the buyer of an option can buy (call option) or sell (put option) the underlying asset.

Call Premium

The extra amount above the par value that a bond issuer must pay to redeem a bond before its maturity date.