In an Informed and Voluntary Exchange

question 38

Multiple Choice

In an informed and voluntary exchange,

• A) both parties receive something they value more than what they gave up.
• B) both parties place an equal value on what they received and what they gave up.
• C) neither party can gain more than the other.
• D) one trader can gain only at the expense of the other.

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Definitions:

Clearing Process

The procedure by which financial trades settle; that is, the correct and timely transfer of funds to the seller and securities to the buyer.

Zero-Balance Account

A bank account which maintains a balance of zero by automatically transferring funds from a master account in an amount only large enough to cover checks presented.

BAT Model

A behavioral approach to financial modeling that incorporates psychological factors into market predictions.

Miller-Orr Model

A financial model used to manage cash balances and optimize the level of cash holdings by setting upper and lower limits within which the balance can fluctuate before triggering a transfer of funds.