A Term-Of-Trade Index That Equals 90 Indicates That Compared to the Base

question 79

Multiple Choice

A term-of-trade index that equals 90 indicates that compared to the base year,

• A) it requires a greater output of domestic goods to obtain the same amount of foreign goods.
• B) it requires a lesser amount of domestic goods to obtain the same amount of foreign goods.
• C) the price of exports has fallen from $100 to $90.
• D) the price of imports has fallen from $100 to $90.

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Definitions:

Mean-Variance Efficient Portfolio

A Mean-Variance Efficient Portfolio is an investment strategy that aims to optimize the balance between expected return and risk, as defined by the portfolio's volatility.

Single-Index Structure

A model used in finance to describe the returns of a security as a function of a single market index.

Expected Returns

A rephrased definition for Expected Return: The anticipated income or profit from an investment over a specific period, considering various possible scenarios and their probabilities.

Variances of Returns

A statistical measure of the dispersion of returns for a given security or market index, showing the degree of variation from the average.