An Increase in an Asset's Expected Return Relative to That

question 72

Multiple Choice

An increase in an asset's expected return relative to that of an alternative asset,holding everything else constant,________ the quantity demanded of the asset.

• A)increases
• B)decreases
• C)has no effect on
• D)erases

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Definitions:

Market Risk

The risk of losses in investments due to market variables such as price changes, interest rates, or currency exchange rates.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value.

Debt-equity Ratio

The metric illustrating the proportionate investment of equity and debt in asset financing for a company.

Treasury Bill

Government debts issued with a maturity of up to one year, offered at a price lower than their face value.