In a Market Economy, a Significant Change in Consumers' Desire

question 159

Multiple Choice

In a market economy, a significant change in consumers' desire for product X will

• A)alter the profits or losses received by suppliers of product X.
• B)cause a reallocation of scarce resources.
• C)cause some industries to expand and others to contract.
• D)do all the things mentioned in the other answers.

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Definitions:

Treynor's Measure

A performance metric for determining how well an investment portfolio has compensated the investor for the risk taken, using beta as the risk measure.

Risk-Free Return

The theoretical return on an investment with zero risk, typically represented by government bonds or bills, serving as a benchmark for assessing investment performance.

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.