Suppose That We Learn That Hotels in Los Angeles Generally

question 197

Multiple Choice

Suppose that we learn that hotels in Los Angeles generally operate with an average vacancy rate of 15 percent (in other words, 85 percent of the hotel rooms are filled with guests) .Given this information about excess capacity, we would judge this market to be

• A)an oligopoly.
• B)a perfectly competitive market.
• C)a monopolistically competitive market.
• D)a monopoly.

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Definitions:

Beta

A measure of the volatility, or systematic risk, of a security or portfolio compared to the market as a whole.

Factor Portfolio

A portfolio constructed to have a high sensitivity to certain risk factors, aiming to achieve specific investment outcomes related to those factors.

Well-diversified Portfolio

An investment portfolio spread across different assets to reduce exposure to risk associated with any single investment.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, commonly used in finance to assess the volatility of an investment.