Which of the Following Statements Is TRUE

question 257

Multiple Choice

Which of the following statements is TRUE?

• A) Every point on a budget line lies on an indifference curve.
• B) To determine a consumer's best affordable point, we need only the budget line or the indifference curve.
• C) The price effect is shown by moving up or down a fixed budget line.
• D) Both A and B are true.

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Definitions:

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, often used in finance to quantify the risk of investment returns.

Security Market Line

A representation in financial economics that shows the relation between the risk of an asset and its expected return.

Expected Return-Beta Relationship

A concept in finance that describes the relationship between the expected return of an investment and its beta, indicating the investment's relative risk compared to the market.

Security Market Line

A line that represents the relationship between the expected return of an investment and its risk as measured by beta.