Zachary Spends His Day Studying for a Total of Four

question 74

Multiple Choice

Zachary spends his day studying for a total of four hours and exercising for one hour.Using the concept of utility to explain his choices,we can say

• A) the total utility gained from exercising for one hour is greater than the total utility from studying for four hours.
• B) the marginal utility of exercising for the first hour was greater than the marginal utility of studying for the first hour.
• C) the marginal utility of studying for a fifth hour will be negative.
• D) the marginal utility from studying for a fifth hour is less than the marginal utility from the first hour of exercise.

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Definitions:

Systematic Risk

The potential for loss inherent in the entire market or an entire market segment, also known as market risk or non-diversifiable risk.

Beta

A measure of a stock's volatility in relation to the overall market, indicating its risk level compared to the market average.

Capital Asset Pricing Model

An approach outlining the connection between inherent risks and the expected return of assets, with a focus on stocks.

SML

The Security Market Line, a graphical representation used in the capital asset pricing model (CAPM) to show the relationship between the risk of an investment and its expected return.