Select the True Statements That Follow

question 97

Multiple Choice

Select the true statements that follow.When the indifference curve is tangent to the budget constraint, a consumer:
(i) cannot be made better off without increasing his or her income
(ii) is consuming the best combination of two goods that are attainable
(iii) must be on a linear indifference curve

• A)(i) only
• B)(i) and (ii)
• C)(i) and (iii)
• D)(ii) and (iii).

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Definitions:

Exercise Price

The exercise price is the price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, representing the average difference from the mean; widely used in finance as a measure of investment risk.

Arbitrage Opportunity

The chance to buy an asset at a low price in one market and simultaneously sell it at a higher price in another, securing a risk-free profit.

Long-short Equity Fund

A type of investment fund that takes both long and short positions in stocks, aiming to profit from increases in the prices of some stocks and decreases in the prices of others.