The Economic Surplus of an Action Is

question 27

Multiple Choice

The economic surplus of an action is:

• A)the benefit gained by taking an action.
• B)the difference the explicit and implicit costs of taking an action.
• C)the difference between the benefit and the cost of taking an action.
• D)the money a person has left over after taking an action.

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Definitions:

Sharpe Measure

Sharpe Measure, or Sharpe ratio, is used to assess the performance of an investment by adjusting for its risk, comparing the excess return over the risk-free rate to the standard deviation of the investment.

Personal Risk-Aversion

An individual's degree of unwillingness to accept uncertainty in investment outcomes or financial decisions.

Treynor-Black Model

A portfolio optimization model that blends a passively managed market portfolio with actively managed portfolios to achieve higher risk-adjusted returns.

Active Portfolio

An investment portfolio that is frequently adjusted or traded by managers in an attempt to outperform the market.