Which of the Following Is an Example of a Normative

question 50

Multiple Choice

Which of the following is an example of a normative statement?

• A) The average price of a Whopper Jr. is $1.69.
• B) The United States ought to adopt a flat rate personal income tax.
• C) A higher percentage of prostitutes incarcerated in Miami test positive for AIDS when compared to registered prostitutes in Nevada.
• D) Average growth in real GDP per year was 1.84 percent between 2000 and 2010.

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Definitions:

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of numerical values, often used to assess the risk associated with a particular investment.

Risk-Free Rate

The theoretical return on an investment with no risk of financial loss, typically represented by the yield on government bonds from stable countries.

Perfectly Negatively Correlated

Describes two variables that move in opposite directions; if one increases, the other decreases.

Global Minimum Variance Portfolio

An investment portfolio that is designed to have the lowest possible risk (variance) for the expected return, part of modern portfolio theory.