Autonomous Consumption

question 23

Multiple Choice

Autonomous consumption

• A) increases with income.
• B) is independent of income and must be equal to zero.
• C) is independent of income.
• D) decreases with income.

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Definitions:

Portfolio Excess

Refers to the amount by which the return of a portfolio exceeds the return of a benchmark or risk-free rate.

Sharpe Measure

A method to assess the performance of an investment by adjusting for its risk, comparing the excess return over the risk-free rate to the standard deviation of returns.

Dollar-Weighted

A method of calculating an investment's return that takes into account the time and amount of each cash flow.

Time-Weighted

A method used in finance to measure the performance of investments by calculating the compound growth rate of the investment over a specific period, regardless of external contributions or withdrawals.