Suppose a Political Candidate Is Running for Office, and the Primary

question 77

Multiple Choice

Suppose a political candidate is running for office, and the primary policy issue at stake is the fraction of the locality's budget that will be allocated toward public schools. Forty percent of voters prefer the amount to be 10 percent of the budget, 15 percent of voters prefer 20 percent, and 45 percent of voters prefer 25 percent. According to the median-voter theorem, the candidate will be in support of public school spending as _______ percent of the budget.

• A)10
• B)18
• C)20
• D)25

---

Definitions:

Beta Coefficient

A framework for quantifying the variability, or orderly risk, of a security or investment compilation when juxtaposed with the general market.

Risk Premium

The additional return an investor demands for choosing a risky investment over a risk-free option, serving as compensation for the additional risk.

Capital Asset Pricing Model

A framework that explains the link between the inherent risk and anticipated return on assets, especially equities.

Efficient Frontier

A portfolio optimization concept that outlines the set of optimal portfolios offering the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.