The Income Elasticity of Demand

question 20

Multiple Choice

The income elasticity of demand:

• A) can only be zero or unity.
• B) can only be positive.
• C) can only be negative.
• D) can be positive or negative.

---

Definitions:

Risk-Free Rate

The theoretical rate of return of an investment with no risk of financial loss, often represented by government bonds.

Portfolio Expected Return

The expected return on a portfolio is the weighted average of the anticipated returns of all the securities included in the portfolio, based on their proportions and expected performances.

Portfolio Required Return

The minimum expected return on an investment portfolio that an investor is aiming for, based on their investment goals and risk tolerance.

Beta

A measure of a stock's volatility in relation to the overall market, indicating its relative risk.