In a Competitive Market the Reward to Risk Ratio Can

question 174

Multiple Choice

In a competitive market the reward to risk ratio can be expressed as:

• A) [E(R_A)- R_f]/ß_a> [E(R_B)- R_f]/ß_b
• B) [E(R_{A )}- R_f]/ß_a = [E(R_B)- R_f]/ß_b
• C) [E(R_A)- R_f] = ß_a
• D) E(R_A) = E(R_b)
• E) E(R_A)- E(R_B) = R_f

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Definitions:

Customers Served

The number of consumers who purchase or are provided with a product or service by a business within a specific period.

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the overall returns will eventually decrease after a certain point.

Marginal Product

The additional output that results from using one more unit of a particular input, while holding other inputs constant.

Average Product

The output obtained by dividing the total product by the number of units of the variable input used in production, ideally reflecting productivity per input unit.