Which of the Following BEST Characterizes the Correlation Between Income

question 84

Multiple Choice

Which of the following BEST characterizes the correlation between income and subjective feelings of happiness?

• A) negligible
• B) negative, but weak
• C) positive, but weak
• D) positive and strong

---

Definitions:

Mean-variance Efficient

A portfolio that offers the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

CAPM

The Capital Asset Pricing Model is a conceptual model employed to calculate the anticipated return on an investment, taking into account both the risk associated with the investment and the time value of money.

Market Portfolio

A theoretical portfolio that includes all assets available in the market, each weighted by its market capitalization, often used in the Capital Asset Pricing Model (CAPM).

SML Relationship

The Security Market Line relationship, which represents the expected return of a security or portfolio in relation to its beta, or market risk.