Stricter Environmental Regulations and Increased Demand for Energy Have Caused

question 47

Multiple Choice

Stricter environmental regulations and increased demand for energy have caused an increase in the demand for relatively clean natural gas. In the last several years, improved extraction technologies and new discoveries have increased the availability of natural gas. What has been the net effect on price and quantity for natural gas?

• A) Quantity sold and price both fell with certainty.
• B) Quantity sold fell and the effect on price is ambiguous.
• C) Quantity sold and price both rose with certainty.
• D) Quantity sold rose while the effect on price is ambiguous.

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Definitions:

Portfolio Beta

A measure used to determine the volatility of a portfolio's returns relative to the overall market.

Expected Return

The anticipated profit or loss from an investment, calculated as an average of all possible outcomes weighted by their likelihood of occurrence.

Reward To Risk Ratio

A metric used by investors to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.

Risk Premium

The additional return expected by an investor for taking a higher risk.