Figure 2-18 -Refer to Figure 2-18. One Segment of the Circular Flow

question 17

Multiple Choice

Figure 2-18
-Refer to Figure 2-18. One segment of the circular flow diagram in the figure shows the flow of funds from economic agents E to market F. Who are economic agents E and what is market F?

• A) E = households; F = product markets
• B) E = firms; F = product markets
• C) E = households; F = factor markets
• D) E = firms; F = factor markets

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Definitions:

Bogey Portfolio

A benchmark portfolio against which the performance of an investment portfolio can be measured.

Bonds

Financial instruments representing loans made by an investor to a borrower, typically corporate or governmental, which are expected to be paid back with interest.

Sharpe Measure

An indicator of the performance of an investment compared to a risk-free asset, adjusted for its risk, calculated as the difference in returns divided by the standard deviation of the investment.

Reward

Typically refers to the potential gains or returns derived from an investment or action, balanced against the risk involved.