With Speculation, Prices

question 150

Multiple Choice

With speculation, prices:

• A) become less volatile than they otherwise would be.
• B) are highly volatile because speculators on average have poor information.
• C) either rise in both the present and the future, or fall in both the present and the future.
• D) are perfectly smooth because speculators always guess correctly.

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Definitions:

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the net profit from an investment by the original capital cost.

Invested Assets

Assets acquired for the purpose of generating income through investment, rather than for use in the operations of a business.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales generated, indicating the efficiency of a company in converting sales into profits.

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the benefits of an investment by its costs.