Which of the Following Is Correct

question 64

Multiple Choice

Which of the following is correct?

• A)Risk-averse people will not hold stock.
• B)Diversification cannot reduce firm-specific risk.
• C)The larger the percentage of stock in a portfolio,the greater the risk,but the greater the average return.
• D)Stock prices are determined by fundamental analysis rather than by supply and demand.

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Definitions:

Short Run

A period in economics during which at least one factor of production is fixed, limiting the adjustment processes of the economy.

Production Function

A mathematical representation of the relationship between inputs used in production and the output generated.

Returns to Scale

The rate at which output increases as inputs are proportionally increased in the production process.

Production Function

A Production Function describes the relationship between inputs used in production and the output resulting from their use, showing how output changes as inputs change.