Unsystematic Risk

question 3

Multiple Choice

Unsystematic risk:

• A) can be effectively eliminated by portfolio diversification.
• B) is compensated for by the risk premium.
• C) is measured by beta.
• D) is measured by standard deviation.
• E) is related to the overall economy.
• F) None of the above.

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Definitions:

Utility Function

This represents how consumer preferences can be quantified based on different levels of consumption of various goods and services.

Income Rises

An increase in the amount of money earned by an individual or household, which can affect consumption patterns and demand for goods and services.

Engel Curve

An Engel curve depicts the relationship between an individual's income and the quantity of a good purchased, illustrating how spending on the good varies with changes in income.

Demand Curve

graphically represents the relationship between the price of a good and the quantity of that good that buyers are willing to purchase at various prices.