The Expected Return on a Stock Given Various States of the Economy

question 48

Multiple Choice

The expected return on a stock given various states of the economy is equal to the:

• A) highest expected return given any economic state.
• B) arithmetic average of the returns for each economic state.
• C) summation of the individual expected rates of return.
• D) weighted average of the returns for each economic state.
• E) return for the economic state with the highest probability of occurrence.

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Definitions:

Aggregate Demand

Aggregate demand represents the total demand for all goods and services within a country's economy at a given overall price level and in a given time period.

Production Possibilities Curve

A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.

Foreign Aid

Economic, technical, or military assistance given by one country to another for purposes of relief and redevelopment, economic stabilisation, or mutual defense.

Surplus Labor

The portion of the labor force that exceeds the amount of labor needed to produce a given level of output, often leading to unemployment.