Which of the Following Statements Is FALSE

question 12

Multiple Choice

Which of the following statements is FALSE?

• A)returns on stocks tend to be highly volatile
• B)a small rise in long-term interest rates can cause a huge drop in stock values
• C)the timing of stock market swings is unpredictable
• D)on average returns on stocks tend to be lower than returns on bonds
• E)the fact that stock market behavior is well understood makes future stock prices hard to predict

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Definitions:

Equivalent Variation

An economic measure of the amount of money that leaves an individual equally well off, given changes in prices or utility.

Income

The financial gain received by an individual or entity, typically measured over a certain period, resulting from labor, investments, or other sources.

Prices

The amount of money required to purchase a good, service, or asset, often determined by factors such as supply and demand, production costs, and market competition.

Utility Function

A mathematical representation in economics that captures the satisfaction or utility a consumer derives from consuming goods or services.