What Does a Lorenz Curve Illustrate

question 93

Multiple Choice

What does a Lorenz curve illustrate?

• A)a comparison of the distribution of income in two different countries
• B)the distribution of income within a country in a given time period
• C)the share of taxes paid by different groups of households
• D)the change over time in the percentage of households with incomes that place them below the poverty line

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Definitions:

Growth Rate

The rate at which a company's sales, earnings, or other chosen financial indicator increases over a period of time.

Market Risk Premium

The additional return expected by an investor for holding a risky market portfolio instead of risk-free assets.

Risk-Free Rate

The hypothetical yield on a risk-free investment, often exemplified by state-issued bonds.

Cost Of Equity

The return that a company must offer investors to compensate for the risk of investing in its shares.