Which of the Following Explains the Difference Betweencommand and Control

question 12

Multiple Choice

Which of the following explains the difference betweencommand and control policies and tradeable allowances?

• A)Command-and-control policies are a government solution to externalities, whereas tradeable allowances are a type of
• Private market solution.
• B)Tradeable allowances allow for less flexibility than command and control policies.
• C)Command-and-control policies require all firms to reduce pollutants by a specific quantity, whereas tradeable allowances
• Allow some firms to pollute more than others by trading for
• Pollution rights.
• D)Tradeable allowances sometimes result in higher overall levels of pollutants because firms can simply purchase the
• Rights to pollute more, whereas the quantity of pollution is
• Fixed under command and control.

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Definitions:

Information Ratio

This ratio measures the excess return of a portfolio over the benchmark's return, relative to the volatility of those excess returns, indicating the portfolio manager's ability to generate consistent excess returns.

Risk-Free Return

The theoretical return on investment with no risk of financial loss, often represented by the yield on government securities.

Sharpe's Measure

A metric used to evaluate the risk-adjusted return of an investment, calculating the excess return per unit of deviation in an investment.

Risk-Free Return

The return on investment that is guaranteed, with no risk of financial loss.