Which of the Following Is an Adequate Definition of Broad

question 37

Multiple Choice

Which of the following is an adequate definition of broad money?

• A) Currency plus bank current deposits of the private non-bank sector.
• B) 'M1' plus borrowings from the private sector by non-bank financial institutions less the latter's holdings of currency ad bank deposits.
• C) 'M3' plus borrowings from the private sector by non-bank financial institutions.
• D) None of the listed options are correct.

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Definitions:

Market Risk Premium

The higher return an investor foresees from investing in a market portfolio with associated risks as opposed to choosing completely safe assets.

Risky Asset

An asset that carries a higher degree of risk of loss, but also offers a higher potential return.

Risk-free Asset

An investment with zero risk of financial loss, theoretically providing guaranteed returns, such as government bonds.

Portfolio Betas

Measures the volatility, or systemic risk, of a portfolio of investments relative to the overall market, indicating its sensitivity to market movements.