As the Circular Flow Model Shows, the Factors of Production

question 56

Multiple Choice

As the circular flow model shows, the factors of production flow from

• A)households to firms through the goods market.
• B)firms to households through the factor market.
• C)firms to households through the goods market.
• D)the goods market through firms to the factor markets.
• E)households to firms through the factor market.

Grasp the basics and application of the Capital Asset Pricing Model (CAPM).

Familiarize with the calculation and implications of a stock’s beta in portfolio management.

Learn how to calculate the expected return of a portfolio comprising different securities.

Identify the relationship between risk and return and how it affects investment decisions.

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Definitions:

Money Market Instrument

Short-term debt instruments, often with high liquidity and low risk, used by companies and governments to manage their finances efficiently.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories.

Treasury Note

Debt obligation of the federal government with original maturity between 1 and 10 years.

Dow Jones Industrial Average (DJIA)

An index that shows how 30 large, publicly-owned companies based in the United States have traded during a standard trading session in the stock market.