The Private Sector Balance Equals

question 189

Multiple Choice

The private sector balance equals

• A) saving plus investment.
• B) saving minus investment.
• C) net taxes minus government expenditures.
• D) net taxes plus government expenditures.
• E) investment minus saving.

---

Definitions:

Risky Asset

An asset whose returns can vary considerably and are not predictable, presenting a higher chance of loss.

Risk-free Asset

An investment that is assumed to have no risk of financial loss, typically represented by government bonds.

Beta

A measure of a stock's volatility in relation to the stock market as a whole, indicating the risk associated with investing in a particular stock.

CAPM

The Capital Asset Pricing Model, a formula that describes the relationship between systematic risk and expected return for assets, particularly stocks.