According to Portfolio Theory If You Do Not Want to Bear

question 4

Multiple Choice

According to Portfolio Theory if you do not want to bear much risk:

• A) Don't invest in risky assets.
• B) Buy a diversified mixture of risky assets and lever your investment by borrowing.
• C) Buy a diversified mixture of risky assets and also invest in Government bonds.
• D) Invest only in efficient markets.

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Definitions:

Advertising Elasticity of Demand

Advertising elasticity of demand quantifies the change in demand for a product as a result of a change in the amount of advertising for that product.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Willingness-To-Pay

The maximum amount an individual is ready to spend to purchase a good or service or to avoid something undesirable.

Marginal Cost

The price required to create another unit of a good or service.