In 2007, Franceʹs GDP Totalled $1

question 177

Multiple Choice

In 2007, Franceʹs GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in 2007 was $357 billion and in 2006 was $335 billion. Suppose that depreciation is 12 percent of GDP. investment in 2007 was billion.

• A) Net; $129
• B) Gross; $129
• C) Net; $228
• D) Gross; $216

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Definitions:

Portfolio Theory

This is an investment theory which proposes how risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk.

Efficient Market

A financial market theory stating that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the average market return.

Expected Return

The anticipated amount of profit or loss an investor can foresee from an investment, based on historical data or estimated calculations.

Required Return

The minimum expected return by investors for investing in a particular asset, taking into account the risk level of the investment.